The Following Information Pertains to Questions

question 5

Multiple Choice

The following information pertains to questions
ABC purchased specialized machinery on January 1,2010 for $2,500.Due to certain restrictions,only 40% of the acquisition cost of the asset is tax deductible.ABC pays tax at a rate of 20%.
-What is the carrying value of this asset?

• A)$1,500
• B)$2,500
• C)$2,875
• D)$2,200

---

Definitions:

Crude Oil

A natural, unrefined petroleum product composed of hydrocarbon deposits and other organic materials.

Distillation

A process of separating components from a liquid mixture by selective boiling and condensation, commonly used in the purification of water, alcohol, and chemicals.

Hydrocarbon

is an organic compound consisting entirely of hydrogen and carbon atoms, commonly found in fossil fuels and as the basis of various organic substances.

Petroleum

A naturally occurring liquid found beneath the Earth's surface that can be refined into fuel and various chemical products.