A Company Used Straight-Line Depreciation for an Item of Equipment

question 16

Multiple Choice

A company used straight-line depreciation for an item of equipment that cost $12,000, had a salvage value of $2,000 and a five-year useful life. After depreciating the asset for three complete years, the salvage value was reduced to $1,200 but its total useful life remained the same. Determine the amount of depreciation to be charged against the equipment during each of the remaining years of its useful life:

• A) $2,400
• B) $2,000
• C) $5,400
• D) $1,800
• E) $1,000

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Definitions:

Assignment

The transfer of rights, duties, or interests under a contract or agreement from one party to another.

Assignor

An individual or entity that transfers rights or interests in a property, contract, or other asset to another.

Assignee

A person or entity to whom rights or interests have been transferred through a legal agreement or contract.

UCC

Stands for Uniform Commercial Code, a comprehensive set of laws governing commercial transactions in the United States.