Wilson Owned Equipment with an Estimated Life of 10 Years

question 29

Multiple Choice

Wilson owned equipment with an estimated life of 10 years when it was acquired for an original cost of $80,000. The equipment had a book value of $50,000 at January 1, 2012. On January 1, 2012, Wilson realized that the useful life of the equipment was longer than originally anticipated, at ten remaining years. On April 1, 2012 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: $\begin{array}{lrrr}&2012&2013&2014\\\text { Net income } & \$ 100,000 & \$ 120,000 & \$ 130,000 \\\text { Dividends } & 40,000 & 50,000 & 60,000\end{array}$ Compute Wilson's share of income from Simon for consolidation for 2012.

• A)$72,000.
• B)$90,000.
• C)$73,575.
• D)$73,800.
• E)$72,500.

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Definitions:

Empathic Understanding

The ability to accurately perceive and understand the feelings and thoughts of others from their point of view.

Client-centered Therapy

A form of psychotherapy developed by Carl Rogers that emphasizes providing a supportive emotional environment for clients, who lead their own process of self-discovery.

Subjective Experiences

Personal, individual experiences that are influenced by personal perceptions, feelings, and interpretations, and not necessarily observable by others.

Nondirective Therapy

A form of psychotherapy in which the therapist refrains from giving advice or interpretation, allowing the client to lead the direction of the therapy.