A Computer Equipment Was Acquired at the Beginning of the Year

question 95

Multiple Choice

A computer equipment was acquired at the beginning of the year at a cost of $56,000 with an estimated residual value of $5,000, and an estimated useful life of 5 years.Determine the second year's depreciation expense using the straight-line method.

• A) $10,200
• B) $22,400
• C) $11,200
• D) $12,200

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Definitions:

Scale Economies Index

A measurement that assesses the advantages a business gains due to the scale of its operation, typically resulting in reduced costs per unit as production increases.

Cost-Output Elasticity

The responsiveness of the cost of producing a good or service to changes in the level of output.

Diseconomies of Scale

A situation where a business grows so large that the costs per unit increase. It occurs when economies of scale no longer function for a firm.

Production Function

An equation or model that describes the relationship between inputs used in production and the output produced.