Dividends in arrears on cumulative preferred stock A) should be recorded as a current liability until they are paid. B) never have to be paid, even if common dividends are paid. C) must be paid before common stockholders can receive a dividend. D) enable the preferred stockholders to share equally in corporate earnings with the common stockholders. The book value of an asset is equal to the A) asset's fair value less its historical cost. B) replacement cost of the asset. C) asset's cost less accumulated depreciation. D) blue book value relied on by secondary markets. On January 1, a machine with a useful life of four years and a salvage value of $16,000 was purchased for $80,000. What is the depreciation expense for year 2 under straight-line depreciation? A) $16,000. B) $32,000. C) $20,000. D) $40,000. Bates Company purchased equipment on January 1, 2016, at a total invoice cost of $1, 200,000. The equipment has an estimated salvage value of $30,000 and an estimated useful life of 5 years. What is the amount of accumulated depreciation at December 31, 2017, if the straight-line method of depreciation is used? A) $468,000. B) $234,000. C) $240,000. D) $480,000. A company sells a plant asset that originally cost $375,000 for $125,000 on December 31, 2017. The accumulated depreciation account had a balance of $150,000 after the current year's depreciation of $37, 500 had been recorded. The company should recognize a A) $100,000 gain on disposal. B) $100,000 loss on disposal. C) $250,000 loss on disposal. D) $62, 500 loss on disposal