Wilson Engineering Purchased a Depreciable Asset Costing $45,000 on January

question 185

Multiple Choice

Wilson Engineering purchased a depreciable asset costing $45,000 on January 1,Year 1.The asset is estimated to have a salvage value of $5,000 and an estimated useful life of 8 years.Straight-line depreciation is used.If the asset is sold on July 1,Year 5 for $20,000,the journal entry to record the sale will include:

• A)A credit to cash for $20,000.
• B)A debit to accumulated depreciation for $22,500.
• C)A debit to loss on sale for $10,000.
• D)A credit to loss on sale for $10,000.
• E)A debit to gain on sale for $2,500.

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Definitions:

Standard Deviation

A measure of the dispersion or variation in a set of values, indicating how much the numbers in the set deviate from the mean (average).

Risk-free Rate

This is the theoretical rate of return of an investment with zero risk, typically represented by the yield on government securities.

Call Option

A financial agreement which permits the purchaser the option, though not the requirement, to purchase a specific asset like a stock, bond, commodity, or another type of asset at a predetermined price during a defined timeframe.

Exercise Price

The price at which the holder of an option can buy (call) or sell (put) the underlying security.