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:

Monopolistic Competition

An economic model describing a market structure where many companies sell products that are similar but not identical, allowing for significant control over prices and product differentiation.

Industry Output

The total production of goods and services by all firms in a specific industry over a defined period.

Economic Profits

The excess of total revenues over total costs, including both explicit and implicit costs.

Market Demand

The total quantity of a good or service that all consumers in a market are willing and able to purchase at various prices.