Norwood, Inc

question 156

Multiple Choice

Norwood, Inc.purchased a crane at a cost of $80,000.The crane has an estimated residual value of $5,000 and an estimated life of 8 years, or 12,500 hours of operation.The crane was purchased on January 1, 2016 and was used 2,700 hours in 2016 and 2,600 hours in 2017.
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-Refer to the information about Norwood, Inc. What amount will Norwood, Inc.report as depreciation expense over the 8-year life of the equipment?

• A) $60,000
• B) $72,000
• C) $75,000
• D) $80,000

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Definitions:

Increasing Prices

A situation where the cost of goods or services rises over a period of time, often due to factors like inflation or increased demand.

Income Tax Expense

The cost incurred by businesses or individuals due to the taxes on their income.

Inventory Flow Assumption

Pertains to the method used by a business to account for the order in which inventory is sold or used over time.

Beginning Inventory

The cost of merchandise on hand for sales at the commencement of an accounting cycle.