A Factory Machine Was Purchased for $70,000 on January 1

question 135

Multiple Choice

A factory machine was purchased for $70,000 on January 1, 2014. It was estimated that it would have a $14,000 salvage value at the end of its 5-year useful life. It was also estimated that the machine would be run 40,000 hours in the 5 years. If the actual number of machine hours ran in 2014 was 4,000 hours and the company uses the units-of-activity method of depreciation, the amount of depreciation expense for 2014 would be

• A) $7,000.
• B) $11,200.
• C) $14,000.
• D) $5,600.

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Definitions:

Median Training Hours

The midpoint number of hours spent on training wherein half of the cases are above and half are below this value.

Lagging Indicator

A measurable economic factor that changes only after the economy has begun to follow a particular pattern or trend.

Leading Indicator

Economic factors that change before the economy starts to follow a particular pattern or trend, used to predict future economic activity.

Corporate Social Responsibility Objective

A self-regulated business model that helps a company be socially accountable—to itself, its stakeholders, and the public.