Avatar,Inc

question 221

Multiple Choice

Avatar,Inc.bought a machine on January 1,2011 for $96,000.The machine is expected to last for 8 years,after which it will be worthless.What is the book value of the machine on Avatar's balance sheet at December 31,2011?

• A)$96,000
• B)$16,000
• C)$12,000
• D)$84,000

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Definitions:

Production Activity

The process of transforming raw materials into finished goods or services.

Work in Process

Goods that are in various stages of production within a manufacturing process but are not yet completed products.

FIFO Method

"First-In, First-Out," an accounting method for valuing inventory that assumes the first items purchased or produced are the first ones sold.

Cost Reconciliation

A process of verifying and adjusting the cost of a product or project by comparing budgeted or standard costs to actual incurred costs.