D is corrent. The requirement is to determine the depreciable base used by the new owners. The depreciable base is calculated as historical cost to the new owners less the estimated salvage value determined by the new owners. Therefore, this answer is correct, because the depreciable base is equal to $120,000 ($135,000 – $15,000). The carrying value and estimated residual value to the previous owner are ignored.
A is incorrect. The requirement is to determine the depreciable base used by the new owners. The depreciable base is calculated as historical cost to the new owners less the estimated salvage value determined by the new owners. Therefore, this answer is incorrect, because the depreciable base is equal to $120,000 ($135,000 – $15,000). The carrying value and estimated residual value to the previous owner are ignored.
A is incorrect. The requirement is to determine the depreciable base used by the new owners. The depreciable base is calculated as historical cost to the new owners less the estimated salvage value determined by the new owners. Therefore, this answer is incorrect, because the depreciable base is equal to $120,000 ($135,000 – $15,000). The carrying value and estimated residual value to the previous owner are ignored.
A is incorrect. The requirement is to determine the depreciable base used by the new owners. The depreciable base is calculated as historical cost to the new owners less the estimated salvage value determined by the new owners. Therefore, this answer is incorrect, because the depreciable base is equal to $120,000 ($135,000 – $15,000). The carrying value and estimated residual value to the previous owner are ignored.
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