A Few Years Ago,Locke Ltd

question 7

Multiple Choice

A few years ago,Locke Ltd.had purchased a machine from its wholly-owned subsidiary,Dubois Ltd. ,for $90,000.Locke has just sold the machine to an unrelated party for a $15,000 gain.At the time of the sale,there was still an unrealized gain of $50,000 from the purchase from Dubois.With this sale of the asset to the unrelated party,what is the amount of gain that should be recognized on Locke's consolidated financial statements?

• A)$15,000
• B)$50,000
• C)$55,000
• D)$65,000

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Definitions:

Monopolistic Competition

A market structure characterized by many firms selling products that are similar but not identical, leading to competition based on product differentiation.

Four-Firm Concentration Ratio

A metric that measures the total market share held by the top four firms within a specific industry, indicating the level of market concentration.

Herfindahl Index

A measure of market concentration used to determine the competitiveness of an industry, calculated by squaring the market share of each firm competing in the market.

Oligopoly

A market structure characterized by a small number of firms that dominate the market, leading to limited competition and potential for collusion.