An Asset Was Purchased for $400,000

question 182

Multiple Choice

An asset was purchased for $400,000.It had an estimated salvage value of $80,000 and an estimated useful life of 10 years.After 5 years of use, the estimated salvage value is revised to $64,000 but the estimated useful life is unchanged.Assuming straight-line depreciation, depreciation expense in Year 6 would be

• A)$48,000.
• B)$35,200.
• C)$24,000.
• D)$33,600.

---

Definitions:

Estimated Return Rate

The projected rate at which returned merchandise from customers is expected, affecting inventory and revenue calculations.

Five-Step Model

A framework used in accounting to recognize revenue, involving identifying the contract, the performance obligations, the transaction price, allocation of price, and revenue recognition as performance obligations are satisfied.

Refund Liability

An obligation of the seller to return the funds to a buyer due to returns, cancellations, or dissatisfaction with goods or services sold.

Return Of Goods

The process by which customers return purchased goods to the seller due to defects, dissatisfaction, or other reasons, affecting inventory and sales revenue.