A Plant Asset Was Purchased on January 1 for $75,000

question 108

Multiple Choice

A plant asset was purchased on January 1 for $75,000 with an estimated salvage value of $15,000 at the end of its useful life.The current year's depreciation expense is $5,000 calculated on the straight-line basis and the balance of the Accumulated Depreciation account at the end of the year is $35,000.The remaining useful life of the plant asset is

• A)15 years
• B)12 years
• C)7 years
• D)5 years

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Definitions:

Equipment Cost

The total amount spent on purchasing equipment, including the purchase price, taxes, shipping, and installation fees.

Depreciation Expense

The portion of the cost of a fixed asset that is considered to be consumed in its period of use and charged as an expense to a company's income statement.

Office Furniture

Items and fixtures used in an office setting, including desks, chairs, and file cabinets, considered as fixed assets in accounting.

Supplies Expense

An accounting term denoting the cost of consumable items used during a reporting period but not directly associated with goods sold.