Wilson Owned Equipment with an Estimated Life of 10 Years

question 44

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 the gain on transfer of equipment reported by Wilson for 2012.

• A)$19,500.
• B)$18,250.
• C)$11,750.
• D)$38,250.
• E)$37,500.

---

Definitions:

Success Occurrence

A term referring to the incidence or event in which a desired outcome or goal is achieved.

Random Variable

A mathematical variable with numerical outputs originating from random incidents.

Major Organic Product

The major organic product is the primary substance produced in a chemical reaction involving organic compounds, usually present in the largest amount compared to other products.

Organic Reaction

A chemical reaction involving organic compounds, where the reactants undergo a chemical change to produce new organic products.