Use the Following Information for Questions

question 6

Multiple Choice

Use the following information for questions.
In January 2012, Marcus Ltd.has installation costs of £9,000 on new machinery that were charged to Repair Expense.Other costs of this machinery of £30,000 were correctly recorded and have been depreciated using the straight-line method with an estimated life of 10 years and no residual value.At December 31,2012, Marcus decides that the machinery ha a remaining useful life of 15 years, starting with January 1,2012
-If the book have not been closed for 2012 and depreciation expense has not yet been recorded for 2012, the entry that marcus makes in 2012 to record depreciation on the machinery acquired in January, 2011, will include:

• A)a debit to Depreciation Expense for £2,600
• B)a credit to Accumulated Depreciation for £900.
• C)a debit to Depreciation Expense for £3,900
• D)a credit to Depreciation Expense for £2,340

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Definitions:

Utility Function

An economic model that ranks an individual's preferences for different combinations of various goods and services.

Edgeworth Box

A diagrammatic tool used in microeconomics to show various distributions of resources or outcomes between two agents in an economy.

Contract Curve

In economics, a curve representing the set of optimal allocation points for two parties trading two goods, assuming utility maximization.

Competitive Equilibrium

A state in a market where supply equals demand, and the prices enable buyers and sellers to be in equilibrium.