On January 1, 2015, a Machine with a Useful Life

question 113

Multiple Choice

On January 1, 2015, a machine with a useful life of five years and a residual value of $2,500 was purchased for $25,000.Using the double diminishing-balance method, the depreciation expense for the year ending December 31, 2016 would be

• A)$10,000.
• B)$ 9,000.
• C)$ 6,000.
• D)$ 5,400.

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Definitions:

Variable Costing

An approach in accounting where only direct materials, direct labor, and variable manufacturing overhead costs are considered in calculating the cost of products.

Net Operating Income

The total profit of a company after operating expenses are deducted, but before interests and taxes are subtracted.

Fixed Cost

Costs that do not change with the level of production or sales activity, such as rent or salaries.

Segment Margin

The amount of profit or loss produced by a particular segment of a business, considering only the revenues and expenses directly attributable to that segment.