Ivory Has a Model B Widget-Making Machine That Originally Cost

question 56

Multiple Choice

Ivory has a Model B widget-making machine that originally cost $77,000 (accumulated amortization, $44,000) . It has a current market value of $20,000. Ivory exchanged this machine for a similar widget-making machine (a smaller one, Model A) owned by EC. The Model A originally cost $46,000 (accumulated amortization to date, $37,400) . It has a current market value of $18,000. Ivory received $10,000 cash on the exchange. Ivory should record the cost of the Model A widget-making machine acquired at:

• A) $10,000.
• B) $18,000.
• C) $20,000.
• D) $25,000.

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Definitions:

Allocated Fixed Costs

Fixed costs that are distributed across different departments or projects based on determined criteria.

Income From Operations

Earnings generated from the normal business activities of a company, excluding income from other sources like investments.

Decentralization

The distribution of decision-making authority to lower levels in an organization, allowing closer proximity to decision-making and customer interaction.

Responsibilities Delegated

Tasks or duties assigned to a subordinate or team member by a person with authority or leadership within an organization.