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

question 5

Multiple Choice

An asset being amortized with the straight-line method has a residual value of $10,000 and accumulated amortization expense 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:

Roth IRA

is an individual retirement account allowing withdrawals on a tax-free basis, provided certain conditions are met, financed by after-tax dollars.

Coverdell Education Savings Account

A tax-advantaged savings account designed to pay for education expenses at both secondary and post-secondary levels.

Traditional IRA

An individual retirement account that offers tax deferral on contributions and investment gains, with taxes paid on money withdrawn during retirement.

Coverdell Education Savings Account

An investment account in the U.S. with tax benefits, intended to promote savings for future educational costs.