Wilson Owned Equipment with an Estimated Life of 10 Years

question 48

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 amortization of gain through a depreciation adjustment for 2012 for consolidation purposes.

• A) $1,950.
• B) $1,825.
• C) $1,500.
• D) $2,000.
• E) $5,250.

Understand the legal entitlements and obligations regarding credit reports and consumer rights.

Assess financial behaviors and make informed decisions to maintain financial health.

Identify and utilize resources and accommodations available for students with disabilities under the Americans with Disabilities Act.

Recognize the focus and benefits of service learning in academia.

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Definitions:

MC (Marginal Cost)

The rise in overall expenses associated with the production of an extra unit of a product or service.

Break-Even Point

The level of production or sales at which total revenues equal total costs, resulting in no profit or loss.

Shutdown Point

The shutdown point is the level of output and price at which a business covers its variable costs; operating below this point would lead the firm to losses greater than its fixed costs.

AVC (Average Variable Cost)

The cost of labor, materials, and other variable inputs divided by the quantity of output produced.