Canliss Mining Uses the Replacement Method to Determine Depreciation on Its

question 149

Multiple Choice

Canliss Mining uses the replacement method to determine depreciation on its office equipment. During 2016, its first year of operations, office equipment was purchased at a cost of $14,000. Useful life of the equipment averages four years and no salvage value is anticipated. In 2018, equipment costing $5,000 was sold for $600 and replaced with new equipment costing $6,000. Canliss would record 2018 depreciation of:

• A) $3,500.
• B) $4,400.
• C) $5,400.
• D) None of these answer choices are correct.

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Definitions:

Market Price

The ongoing rate for transactions involving the purchase or sale of assets or services.

Debt-To-Equity Ratio

A financial proportion depicting how much of a company's assets are financed through debt versus equity from shareholders.

Balance Sheet

a financial statement that provides a snapshot of a company's financial position at a particular point in time, detailing assets, liabilities, and equity.

Income Statement

A report detailing income and outgoings of a business for a set time frame, culminating in a profit or deficit.