Wilson Owned Equipment with an Estimated Life of 10 Years

question 61

Multiple Choice

Wilson owned equipment with an estimated life of 10 years when the equipment was acquired for an original cost of $80,000. The equipment had a book value of $50,000 at January 1, 2020. On January 1, 2020, Wilson realized that the useful life of the equipment was longer than originally anticipated, at ten remaining years.On April 1, 2020 Simon Company, a 90% owned subsidiary of Wilson Company, bought the equipment from Wilson for $68,250 and for depreciation purposes used the estimated remaining life as of that date. The following data are available pertaining to Simon's income and dividends declared: Compute the amortization of gain through a depreciation adjustment for 2020 for consolidation purposes.

• A)$1,950.
• B)$1,825.
• C)$1,500.
• D)$2,000.
• E)$5,250.

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Definitions:

Elaborative Rehearsal

A memory technique that involves thinking about the meaning of the information and connecting it to other knowledge the person has, to better retain the information.

Tip-Of-The-Tongue Effect

A cognitive phenomenon where a person cannot fully retrieve a word or name but has a partial recall or feels that retrieval is imminent.

Encoding Failure

The inability to recall specific information because it was not encoded into memory effectively.

Acoustic Storage

The part of memory that holds audio information for a brief period following hearing it.