Equipment with a Cost of $640,000 Has an Estimated Salvage

question 121

Multiple Choice

Equipment with a cost of $640,000 has an estimated salvage value of $40,000 and an estimated life of 4 years or 15,000 hours.It is to be depreciated using the units-of-activity method.What is the amount of depreciation for the first full year, during which the equipment was used for 3,300 hours?

• A)$160,000.
• B)$180,800.
• C)$132,000.
• D)$150,000.

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Definitions:

LIFO Cost Flow Assumption

A method in accounting that assumes the last items of inventory purchased are the first ones sold.

Inventory Account

An account in financial accounting that tracks the value of a company's goods intended for sale, including raw materials, work-in-progress, and finished goods.

Legal Title

The formal right of ownership of property, which is recognized and protected by law.

Perpetual Inventory System

An accounting method that records the sale or purchase of inventory immediately through the use of computerized point-of-sale systems and enterprise asset management software.