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:

Subsequent Assignment

The act of transferring rights or obligations to another party after the original assignment has already taken place.

Superior Rights

Legal or contractual rights that have precedence or higher priority over others in a specific situation.

Majority

A term used to describe persons who have reached the legal age of adulthood.

Equal Dignities Rule

The legal rule that provides that when a party appoints an agent to negotiate an agreement that must be in writing, the appointment of the agent must also be in writing.