Cooper Ltd

question 36

Multiple Choice

Cooper Ltd. acquired 70% of the common shares of Effy Ltd. at January 2, 20X1. At December 31, 20X3, Effy sold a machine to Cooper for $180,000. Effy had purchased the machine a few years earlier for $250,000. At the time of sale to Cooper, the machine had a carrying value of $150,000 and a remaining useful life of six years.
- Both companies do not claim amortization for assets purchased in the second half of the year. For Cooper's December 31, 20X3, consolidated financial statements, what net book value should be shown for the machine?

• A)$125,000
• B)$150,000
• C)$180,000
• D)$250,000

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Definitions:

Anticipatory Breach

An assertion or action by a party indicating they will not perform their contractual obligations before they are due to be performed.

Frustrated Contract

A legal concept referring to a contract that, through no fault of either party, is unable to be fulfilled due to unexpected circumstances, rendering the obligations impossible or radically altered.

Loss Apportionment

The process of determining the distribution of loss among different parties, often used in insurance and liability cases.

Liquidated Damages

A remedy requiring the party responsible for a breach to pay an amount specified in the contract.