REFERENCE: Ref.05_07 On April 1,2009 Wilson Company,a 90% Owned Subsidiary of Simon

question 71

Multiple Choice

REFERENCE: Ref.05_07
On April 1,2009 Wilson Company,a 90% owned subsidiary of Simon Company,bought equipment from Simon for $68,250.On January 1,2009,Simon realized that the useful life of the equipment was longer than originally anticipated,at ten remaining years.The equipment had an original cost to Simon of $80,000 and a book value of $50,000 with a 10-year remaining life as of January 1,2009.
The following data are available pertaining to Wilson's income and dividends:

-Compute the gain on transfer of equipment reported by Simon for 2009.

• A)$19,500.
• B)$18,250.
• C)$11,750.
• D)$38,250.
• E)$37,500.

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Definitions:

Tax Rate

A percentage at which an individual or corporation is taxed.

Executive

A high-ranking person in a company or other institution, typically responsible for making large corporate decisions.

Finance Department

A division within an organization responsible for managing financial actions including budgeting and investment strategies.

CFO

Chief Financial Officer, a senior executive responsible for managing the financial actions of a company.