The Key Company Sold a Machine

question 35

Multiple Choice

The Key Company sold a machine.The machine had accumulated depreciation of $50,000 and a salvage value of $6,000.If the machine sold for $16,000 and a gain of $4,000 is recognized,the original cost of the asset is

• A)$54,000.
• B)$62,000.
• C)$66,000.
• D)$70,000.

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Definitions:

Valuation Allowance

An accounting practice that reduces the value of a deferred tax asset if it is likely that the asset may not be fully utilized.

Adjusted From

A term used to indicate the process of making modifications or changes to financial or other data for the purpose of providing a clearer picture of a situation or condition.

Significant Influence

The ability of a shareholder or an entity to shape the financial and operating policies of another company without having control over it.

Cash Dividend

A distribution of a portion of a company's earnings, decided by the board of directors, paid to a class of its shareholders in the form of cash.