Equipment with an Original Cost of $50,000 Has a Fair

question 96

Short Answer

Equipment with an original cost of $50,000 has a fair market value of $65,000 and accumulated depreciation of $15,000 on December 31, 2010. What amount would the December 31, 2010 balance sheet show as the equipment's net book value?

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Definitions:

Fixed Costs

Costs that do not change with the level of output produced by a firm, such as rent, salaries, and equipment costs.

Average Total Cost Curve

A graphical representation of the total cost per unit of output, calculated by dividing the total cost by the quantity of output produced.

Diminishing Marginal Returns

A principle stating that as more of a variable input is added to a fixed input, the additional output from each new unit of input will eventually decrease.

Average Total Cost Curve

A graphical representation showing the cost per unit of output when fixed and variable costs are summed up and divided by the total output.