A Machine with a Cost of $240,000 Has an Estimated

question 275

Multiple Choice

A machine with a cost of $240,000 has an estimated residual value of $15,000 and an estimated useful life of 5 years or 15,000 hours. It is to be depreciated using the units-of-activity method of depreciation. What is the amount of depreciation for the second full year, during which the machine was used 5,000 hours?

• A) $75,000
• B) $45,000
• C) $65,000
• D) $80,000

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Definitions:

Excess Cash

The amount of cash held by a company that exceeds what is needed for day-to-day operations and short-term obligations.

Earnings Per Share

A financial metric that measures the amount of net income earned per share of stock outstanding.

Excess Cash

Funds that exceed the normal operational needs of a business, which may be used for investment or other purposes.