Coppola Company Purchased a Machine on January 1, 2011, for $20,000

question 102

Multiple Choice

Coppola Company purchased a machine on January 1, 2011, for $20,000 cash. In addition, Coppola paid $4,000 to have the machine delivered and installed. The estimated useful life of the machine is 4 years, after which time it is expected to have a salvage value of $8,000. It is also estimated that the machine will produce 200,000 units of product during its useful life. Assuming that the straight-line depreciation method is used, what will be the machine's book value on December 31, 2013?

• A) $8,000
• B) $12,000
• C) $16,000
• D) $14,000

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Definitions:

Treasury Stock

Shares that were once outstanding and have been reacquired by the corporation, reducing the number of shares available on the open market.

Preferred Stock

A class of ownership in a corporation with a higher claim on assets and earnings than common stock, often with set dividend payments.

Common Shares Outstanding

The total number of shares of common stock currently held by all shareholders, including share blocks held by institutional investors and restricted shares owned by the company’s officers and insiders.