Sure Company Purchased a Machine on January 1, 20A, at a Cash

question 82

Multiple Choice

Sure Company purchased a machine on January 1, 20A, at a cash cost of $12,000. The estimated useful life is 10 years, and the estimated residual value is $3,000. The company will use the declining-balance method based on a 150 percent acceleration rate. What will be the depreciation expense for the second year?

• A) $1,800
• B) $900
• C) $1,350
• D) $1,530

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Definitions:

European Call

An option contract giving the holder the right, but not the obligation, to buy a specified asset at a predetermined price on or before a specific expiration date, only exercisable on the expiration date.

Net Profit

The amount of income that remains after subtracting all expenses, taxes, and costs from total revenue.

Convertible Bond

A type of bond that can be converted into a predetermined number of the issuer’s equity shares at certain times during its life.

Discount Rate

The rate used to calculate the present value of future cash flows.