On March 15,2009,Clarion Company Paid Property Taxes of $60,000 on Its

question 31

Multiple Choice

On March 15,2009,Clarion Company paid property taxes of $60,000 on its factory building for calendar year 2009.On July 1,2009,Clarion made $40,000 in unanticipated repairs to its machinery.The repairs will benefit operations for the remainder of the calendar year.What total amount of these expenses should be included in Clarion's quarterly income statement for the three months ended September 30,2009?

• A)$55,000
• B)$15,000
• C)$35,000
• D)$40,000

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Definitions:

Insurance Contracts

Contracts under which one party (the insurer) accepts significant insurance risk from another party (the policyholder) by agreeing to compensate the policyholder if a specific uncertain future event adversely affects the policyholder.

Warranty Obligations

Liabilities recognized by a company to cover the costs of repairs or replacements for products sold within a specified warranty period.

Discount Rate

The interest rate used to discount future cash flows of a financial instrument to present value.