Wilson Owned Equipment with an Estimated Life of 10 Years

question 36

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, 2010. On January 1, 2010, Wilson realized that the useful life of the equipment was longer than originally anticipated, at ten remaining years. On April 1, 2010 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 Wilson's share of income from Simon for consolidation for 2011.

• A) $108,000
• B) $110,000.
• C) $106,000.
• D) $109,825.
• E) $109,800.

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Definitions:

Mainstream Venture Capitalists

Investors that focus on providing capital to firms considered to have high growth potential in well-established markets.

Management

The process of administering and coordinating resources efficiently and effectively in achieving predetermined objectives.

Venture Capital Investors

Individuals or firms that provide funding to start-up companies or small businesses with high growth potential in exchange for equity stakes.

Corporations

Legal entities that are separate from their owners, formed to conduct business, can own assets, incur liabilities, and enter into contracts.