On January 1, 2011, Carson Company Purchased Equipment at a Cost

question 15

Multiple Choice

On January 1, 2011, Carson Company purchased equipment at a cost of $420,000. The equipment was estimated to have a useful life of five years and a salvage value of $60,000. Carson uses the sum-of-the-years'-digits method of depreciation. What should the accumulated depreciation be at December 31, 2014?

• A) $240,000
• B) $288,000
• C) $336,000
• D) $360,000

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Definitions:

Development Costs

Development costs are expenses associated with the creation and design of new products or services, including research and development.

Breakeven Point

The level of production or sales at which total costs equal total revenue, meaning no net loss or gain is incurred.

Fixed Costs

Costs that do not change with the number of sales made.

Variable Cost

Expenses that change in proportion to the activity or volume of business, such as materials and labor.