Equipment with a Cost of $640,000 Has an Estimated Salvage

question 12

Multiple Choice

Equipment with a cost of $640,000 has an estimated salvage value of $40,000 and an estimated life of 4 years or 15,000 hours. It is to be depreciated using the units-of-activity method. What is the amount of depreciation for the first full year, during which the equipment was used 3,300 hours?

• A)$160,000.
• B)$180,800.
• C)$132,000.
• D)$150,000.

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Definitions:

Extraction Companies

Firms that specialize in the removal of natural resources from the Earth, such as oil, natural gas, metals, or minerals.

Flow of Profits

The movement of profits within an economic system, especially as it pertains to how profits are generated, maintained, and distributed among various entities.

Profit-Maximizing Company

A company whose primary goal is to make the largest possible profit from its operations.

Extraction Cost

The cost associated with the removal of resources or raw materials from the earth.