Spears Corporation Bought a Machine on January 1, 2011

question 73

Multiple Choice

Spears Corporation bought a machine on January 1, 2011. In purchasing the machine, the company paid $50,000 cash and signed an interest-bearing note for $100,000. The estimated useful life of the machine is 5 years, after which time the salvage value is expected to be $15,000. The machine is expected to produce 67,500 widgets during its useful life. Given this information, if 10,000 widgets are produced in 2012, how much depreciation should be recorded in 2012, assuming that Spears Corporation uses the units-of-production depreciation method?

• A) $22,222
• B) $20,000
• C) $30,000
• D) $40,000

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Definitions:

Cultural Relativism

The principle of understanding and evaluating cultural practices and beliefs within their own social contexts rather than from an external standpoint.

Social Dominance Orientation

A scale that measures an individual’s preference for hierarchical relationships between social groups and the extent to which they support dominance and inequality among these groups.

Authoritarian Submission

A psychological behavior characterized by uncritical acceptance of authority, where individuals submit excessively to figures they perceive as authoritative.

Tolerance For Ambiguity

The ability or willingness of a person to accept and deal with uncertainty or unclear situations without becoming anxious or stressed.