Equipment with a Cost of $20,000 and a Book Value

question 152

Multiple Choice

Equipment with a cost of $20,000 and a book value of $6,000 was sold during the year for cash of $18,000.Additional equipment was purchased during the year for cash.
The company uses the indirect method in preparing the statement of cash flows.What is the amount of depreciation expense that will be reported in the operating activities section of the statement?

• A)$8,000
• B)$22,000
• C)$14,000
• D)$20,000

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Definitions:

Replenishment Cycle

The recurring process of restocking sold-out or used products in inventory to maintain a desired stock level.

ESC (Expected Shortage per Cycle)

A metric used in inventory management forecasting the expected stockout quantity for a given inventory cycle, aiding in optimization and planning.

Safety Inventories

Stock that is maintained to buffer against uncertainties in demand or supply, ensuring product availability.

Demand Uncertainty

The unpredictability related to the demand for products or services, often causing challenges in supply chain management.