On January 1, 2005, Stetson Company paid $160,000 to obtain a patent. Stetson expected to use the patent for 5 years before it became technologically obsolete. Based on this information, the amount of amortization expense on the December 31, 2007 income statement and the book value of the patent on the December 31, 2007 balance sheet would be:

a. $32,000 / $64,000.

b. $32,000 / $96,000.

c. $64,000/$64,000.

d. $64,000 / $96,000.

An asset with a book value of $19,000 is sold for $16,000. Which of the following answers would accurately represent the effects of the sale on the financial statements? (Note: The answers show the net effect on the total amount under each category. For example, if cash increased by $100 and Accounts Receivable decreased by $70, a net $30 increase would be shown in the assets

= Liabilities = NA #10 Assets A 19000 B (3000) C (3000) D (3000) = NA = NA = NA + Equity + 19000 + (3000) (3000) + (3000) Revenues or Gains - Expenses or Losses = Net Income Cash Flow 19000 NA = 19000 19000 IA NA 3000 = (3000) 3000 OA 3000 3000 3000 IA 3000 = (3000) 16000 IA + NA NA