Use the Following Information to Answer the Question(s) Below

question 29

Multiple Choice

Use the following information to answer the question(s) below.

On January 1, 2012, Shrimp Corporation purchased a delivery truck with an expected useful life of five years, and a salvage value of $8,000. On January 1, 2014, Shrimp sold the truck to Pacet Corporation. Pacet assumed the same salvage value and remaining life of three years used by Shrimp. Straight-line depreciation is used by both companies. On January 1, 2014, Shrimp recorded the following journal entry:

-In the eliminating/adjusting entries on consolidation working papers for 2014,the Truck account was

• A)debited for $3,000.
• B)credited for $3,000.
• C)debited for $15,000.
• D)credited for $15,000.

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Definitions:

Cash Payback Period

The time it takes for a business to recover its investment in a project, through cash inflows.

Desired Rate

Often refers to the target internal rate of return or the specific return percentage that an investor aims for in financial investments.

Present Value Index

A financial calculation that helps to evaluate the profitability of an investment or project by considering the present value of expected cash flows.

Net Present Value Analysis

A method used to evaluate the profitability of an investment or project by calculating the difference between the present value of cash inflows and outflows over time.