Suppose a Firm Has an Asset That Originally Cost $5000

question 14

Multiple Choice

Suppose a firm has an asset that originally cost $5000 and currently has accumulated depreciation of $2000. The firm is subject to a 28 per cent income tax rate. Suppose the firm sells the asset for $2000. What was the book value before sale?

• A) $5000
• B) $2000
• C) $3000
• D) $1500

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Definitions:

Fluid Intelligence

The capacity to think logically and solve problems in novel situations, independent of acquired knowledge.

Abstractly

Thinking in a way that is conceptual and not based on physical realities or practical experiences, often involving complex ideas or theories.

Abstract Reasoning

The ability to analyze information, detect patterns and relationships, and solve problems on a complex, abstract level.

General Knowledge

Refers to information that individuals accumulate over time about a wide range of subjects through education and experience.