Wilson Owned Equipment with an Estimated Life of 10 Years

question 23

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: $\begin{array}{lrrr}&2010&2011&2012\\\text { Net income } & \$ 100,000 & \$ 120,000 & \$ 130,000 \\\text { Dividends } & 40,000 & 50,000 & 60,000\end{array}$
-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:

Benefits

Advantages or gains, often related to employment, insurance, or social welfare programs.

Costs

The expenses incurred in the production of goods or in the provision of services, measured in terms of money, time, or other resources.

Emergency Contraceptives

Medications or devices used to prevent pregnancy after unprotected sex or contraceptive failure.

Divorce Rates

The statistical measure of how often divorce occurs within a population, typically expressed per 1000 marriages.