An Asset Being Depreciated with the Straight-Line Method Has a Residual

question 13

Multiple Choice

An asset being depreciated with the straight-line method has a residual value of $10,000 and accumulated depreciation of $30,000 in its second year.What was the original cost of the asset if its useful life was 5 years?

• A)$160,000
• B)$140,000
• C)$ 85,000
• D)$75,000

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Definitions:

Implied Warranty

A warranty created by operation of law.

Solvent

The state of having assets exceed liabilities, allowing an individual or company to meet its financial obligations.

Delegation

means to transfer authority or responsibility to another person to carry out specific activities.

Assignee

The party to whom rights or interests are transferred by another, often used in context of contracts, leases, or other agreements.