A Machine with a Cost of $75,000 Has an Estimated

question 55

Multiple Choice

A machine with a cost of $75,000 has an estimated residual value of $5,000 and an estimated life of four years or 18,000 hours. What is the amount of depreciation for the second full year, using the double-declining-balance method?

• A) $17,500
• B) $37,500
• C) $18,750
• D) $16,667

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Definitions:

Interest Rate

The cost of borrowing money or the return for investing money, expressed as a percentage of the amount borrowed or invested.

Stock

A share in the ownership of a company, representing a claim on the company's assets and earnings.

Bonds

Financial instruments representing a loan made by an investor to a borrower, typically corporate or governmental, which are obligated to pay back with interest.

Investment Incentives

Benefits, typically in the form of tax reductions or credits, offered to encourage investment by individuals and corporations.