The Following Information Is Available on a Depreciable Asset Owned

question 35

Multiple Choice

The following information is available on a depreciable asset owned by Mutual Savings Bank: $\begin{array}{|l|r|}\hline \text { Purchase date } & \text { June 1, Year } \\\hline \text { Purchase price } & \$ 85,000 \\\hline \text { Salvage value } & \$ 10,000 \\\hline \text { Useful life } & 10 \text { years } \\\hline \text { Depredation method } & \text { straight-line } \\\hline\end{array}$ The asset's book value is $70,000 on June 1, Year 3. On that date, management determines that the asset's salvage value should be $5,000 rather than the original estimate of $10,000. Based on this information, the amount of depreciation expense the company should recognize during the last six months of Year 3 would be:

• A)$8,125.00
• B)$7,375.00
• C)$4,062.50
• D)$3,750.00
• E)$7,812.50

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Definitions:

Generates Revenues

The process through which a business earns income from its normal operations, typically through the sale of goods and services.

Profit Center

A unit or department that incurs costs and generates revenues.

Revenue Center

A division or unit within a business responsible for generating significant income.

Departmental Reports

Internal documents that break down business performance by departments, aiding in analyzing specific areas of a company.