Wilson Owned Equipment with an Estimated Life of 10 Years

question 17

Multiple Choice

Wilson owned equipment with an estimated life of 10 years when it was acquired for an original cost of $80,000. The equipment had a book value of $50,000 at January 1, 2012. On January 1, 2012, Wilson realized that the useful life of the equipment was longer than originally anticipated, at ten remaining years.
On April 1, 2012 Simon Company, a 90% owned subsidiary of Wilson Company, bought the equipment from Wilson for $68,250 and for depreciation purposes used the estimated remaining life as of that date. The following data are available pertaining to Simon's income and dividends:
Compute the gain on transfer of equipment reported by Wilson for 2012.

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

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Definitions:

Dispositional Traits

Enduring personality characteristics that influence behavior across different situations and over time.

False Consensus Effect

The cognitive bias whereby people tend to overestimate how much others agree with their own beliefs, attitudes, or behaviors.

Stimulus Overload Effect

A phenomenon where individuals experience stress or cognitive overload due to an excessive amount of stimuli to process.

Dispositional

Pertaining to one's inherent qualities of mind and character, often used in psychology to describe an individual's tendencies or personality traits.