A Company Purchased Factory Equipment on June 1, 2014 for $48,000

question 225

Multiple Choice

A company purchased factory equipment on June 1, 2014 for $48,000. It is estimated that the equipment will have a $6,000 residual value at the end of its 10-year useful life. Using the straight-line method of depreciation, the amount to be recorded as depreciation expense at December 31, 2014 is

• A) $4,800.
• B) $4,200.
• C) $2,450.
• D) $6,000.

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Definitions:

Profit-Maximizing

A strategy or point where a business achieves the highest possible profit with its current resources and market conditions.

Short Run

A period in economics where at least one input (such as plant size) is fixed, limiting the ability of a firm to adjust to market changes.

Market Price

The current price at which a good or service can be bought or sold in a given market.

Total Revenue

The total income received by a firm from selling its goods or services before any costs or expenses are subtracted.