In 2012, New Wave Inc

question 16

Multiple Choice

In 2012, New Wave Inc. (NW) set up a new manufacturing facility in Manitoba. To encourage NW to set up its factory, the province provided equipment with a fair value of $75,000 and an estimated useful life of 10 years using straight-line depreciation. What journal entry would be required to record the equipment contribution in fiscal 2012, using the net method?

• A)A credit to donation revenue of $75,000.
• B)A credit to other comprehensive income - donated assets of $75,000.
• C)A credit to deferred income of $75,000.
• D)A credit to property, plant and equipment for $75,000.

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Definitions:

Target Payoffs

Expected or desired financial returns from an investment strategy or economic activity.

Collusion

An agreement between firms, typically secret, to limit competition among themselves, such as by setting prices or output levels.

Diagram

A simplified drawing showing the appearance, structure, or workings of something in a conceptual or visual form.

Profits

The financial gain realized when the revenue earned from a business activity exceeds the expenses, costs, and taxes needed to sustain the activity.