Pearson Company Bought a Machine on January 1, 2014

question 188

Multiple Choice

Pearson Company bought a machine on January 1, 2014. The machine cost $144,000 and had an expected salvage value of $24,000. The life of the machine was estimated to be 5 years. The depreciation expense using the straight-line method of depreciation is

• A) $40,000.
• B) $28,800.
• C) $24,000.
• D) none of these answer choices are correct.

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Definitions:

Note Payable

A written agreement where one party promises to pay another a definite sum of money at a specified future date or on demand.

Current Assets

Assets likely to be converted into cash within a year, such as inventory, accounts receivable, and cash and cash equivalents.

Current Liabilities

Short-term financial obligations that are due within one year or within the operating cycle.

Current Assets

Assets that are expected to be converted into cash, sold, or consumed within one year or within the operating cycle of a business, whichever is longer.