On April 1, 2022, Check Mate Ltd

question 67

Multiple Choice

On April 1, 2022, Check Mate Ltd.places a new asset into service.The cost of the asset is $40,000 with an estimated 8-year life and $2,500 residual value.Assuming that Check Mate uses the double diminishing-balance method of depreciation, what is the carrying amount of the asset at December 31, 2022?

• A)$32,500
• B)$30,625
• C)$38,125
• D)$35,000

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Definitions:

Prepaid Expense

An expense paid in advance of its due date, recorded as an asset on the balance sheet until the benefits are realized or the service period expires.

Magazine Subscription

A magazine subscription is an agreement to receive or gain access to periodic issues of a magazine over a specified period, usually in return for a payment.

Paid

Refers to the status of an obligation or invoice that has been settled or fulfilled through payment.

Vertical Analysis

An approach to financial statement examination whereby each component is presented relative to a foundational number in the report.