On June 1, 2022, Ben Casey Buys a Copier Machine

question 131

Multiple Choice

On June 1, 2022, Ben Casey buys a copier machine for his business and finances this purchase with cash and a note. When journalizing this transaction, he will

• A) use two journal entries.
• B) make a compound entry.
• C) make a simple entry.
• D) list the credit entries first, which is proper form for this type of transaction.

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Definitions:

Goodwill

An intangible asset that arises when a company acquires another business for more than the fair value of its net identifiable assets, reflecting attributes like brand, customer base, and employee relations.

Impairment

A decrease in the recoverable value of an asset below its carrying amount on the balance sheet, necessitating a write-down of its value.

Fair Value

An estimate of the price at which an asset or liability would trade in a fair transaction between willing parties.

Useful Life

The estimated period over which an asset is expected to be useful in the operations of a business.