On January 1, 2008, Carnival Shipping Bought a Machine for $1,500,000

question 28

Multiple Choice

On January 1, 2008, Carnival Shipping bought a machine for $1,500,000. At that time, this machine had an estimated useful life of six years, with no salvage value. As a result of additional information, Carnival determined on January 1, 2011, that the machine had an estimated useful life of eight years from the date it was acquired, with no salvage value. Accordingly, the appropriate accounting change was made in 2011. How much depreciation expense for this machine should Carnival record for the year ended December 31, 2011, assuming Carnival uses the straight-line method of depreciation?

• A) $125,000
• B) $150,000
• C) $187,500
• D) $250,000

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Definitions:

Household Production

The process by which families produce goods and services for their own use, typically including tasks such as cooking, cleaning, and childcare.

Leakages

Economic terms referring to the outflow of funds from the economy, such as savings, taxes, and imports, that can reduce the impact of investment and government spending.

Domestic Spending

The total spending on goods and services within a country, including both consumer spending and government expenditure.

Circular Flow

An economic model that illustrates the continuous movement of goods, services, and money between households and businesses.