In 2012, Waverly Corp

question 29

Multiple Choice

In 2012, Waverly Corp. set up a new manufacturing facility in Nova Scotia. To encourage Waverly to set up its factory, the province provided equipment with a fair value of $250,000 and an estimated useful life of 15 years using straight-line depreciation. What journal entry would be required to record the equipment contribution in fiscal 2012, using the gross method?

• A)A credit to donation revenue of $250,000.
• B)A credit to other comprehensive income - donated assets of $250,000.
• C)A credit to deferred income of $250,000.
• D)A credit to property, plant and equipment for $250,000.

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Definitions:

Resources

Various means or inputs (such as labor, capital, land) used in the production of goods and services.

Efficiency

The extent to which resources are used in the most productive way possible to achieve maximum output or outcomes.

Opportunity Costs

The cost of an alternative that must be forgone in order to pursue a certain action or the benefits you miss out on when choosing one alternative over another.

Economic Welfare

The overall health and well-being of an economy, often measured by standards of living, availability of goods and services, and income distribution.