Pearson Company Bought a Machine on January 1, 2022

question 132

Multiple Choice

Pearson Company bought a machine on January 1, 2022.The machine cost $180,000 and had an expected salvage value of $30,000.The life of the machine was estimated to be 5 years.The book value of the machine at the beginning of the third year would be

• A)$180,000.
• B)$150,000.
• C)$120,000.
• D)$60,000.

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Definitions:

Legal Contract

A binding agreement between two or more parties, enforceable by law, that specifies and regulates the rights and duties of the parties involved.

Bondholder

An investor or owner of bonds issued by corporations or governments, entitled to receive interest payments and the principal amount at maturity.

Semiannual Interest

Interest calculated and paid twice a year on investments or loans.

Bond Discount

The difference when the market value of a bond falls below its original principal amount or face value.