On January 1, 2017, Grove City Corp

question 160

Multiple Choice

On January 1, 2017, Grove City Corp. purchased a ship for $2,000,000. It has a ten-year useful life and a residual value of $50,000. The company uses the double-declining-balance method.
-If Grove City Corp.continues to use the ship in its eleventh year,what is the correct accounting procedure?

• A)Take the asset off the books and record a gain on the disposal.
• B)Continue to depreciate it.
• C)The company may not use it any longer.
• D)No longer depreciate it but leave it on the records at its book value at the end of its useful life.

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Definitions:

Consideration

In legal contracts, refers to something of value exchanged between parties, which is a necessary element for the contract to be valid.

Sue

To initiate legal proceedings against a person or entity in order to seek a remedy or resolution for a grievance.

Assignment

A task or piece of work allocated to someone as part of a job or course of study.

Settlement

An agreement reached between parties in a dispute, typically without admission of guilt or fault, to resolve the matter without further legal action.