A Machine That Cost $72,000 Has an Estimated Residual Value

question 137

Multiple Choice

A machine that cost $72,000 has an estimated residual value of $6,000 and an estimated useful life of 5 years or 30,000 hours.Using the units-of-production method, the depreciation expense for the second year, during which the machine was used 5,000 hours, would be

• A)$14,400.
• B)$13,200.
• C)$12,000.
• D)$11,000.

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Definitions:

Capital Gain Yield

The rise in the price of an investment, represented as a percentage of the initial investment cost.

Appraised Value

The estimated value of a property, as determined by a qualified professional appraiser.

Property Taxes

Taxes levied by local governments based on the value of property owned, such as land and buildings.

Compound Annual Rate

The rate of return that would be required for an investment to grow from its beginning balance to its ending one, compounding over a period of a year.