Zero, Inc Purchased Equipment at the Beginning of 2011 for $200,000

question 16

Multiple Choice

Zero, Inc. purchased equipment at the beginning of 2011 for $200,000. Zero decided to depreciate the equipment over a 5-year period using the double-declining-balance method. Zero estimated the equipment's salvage value at $20,000. Which of the following statements is correct concerning Zero's financial statements at December 31, 2011?

• A) The book value of the equipment is $120,000.
• B) The book value of the equipment is $80,000.
• C) The total accumulated depreciation is $90,000.
• D) Depreciation expense for 2011 is $72,000.

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Definitions:

Accounting Costs

Refers to expenses directly tied to the production of goods or services, such as labor, materials, and overhead costs.

Total Revenue

The overall amount of money generated by a business from its activities, typically from sales of goods or services before any expenses are deducted.

Marginal Cost Curves

A graphical representation showing how the cost of producing one additional unit of a good changes as production volume changes.

Law of Diminishing Returns

Law of Diminishing Returns states that in a production process, adding an additional factor of production, while holding all others constant, will at some point yield lower per-unit returns.