Spears Corporation Bought a Machine on January 1, 2011

question 111

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 company uses the sum-of-the-years'-digits depreciation method. Given this information, how much depreciation expense would be recorded for the year ending December 31, 2012?

• A) $45,000
• B) $40,000
• C) $36,000
• D) $34,000

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Definitions:

Mobile Refrigerant

A substance used in mobile air conditioning systems, such as those in vehicles, to absorb and release heat, thus cooling the interior.

Clean Air Act

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Heat Energy

Heat Energy is a form of energy transferred between systems or objects with different temperatures, flowing from the higher temperature object to the lower temperature object.

1 lb of Water

A measure of mass equivalent to approximately 453.6 grams, often used to reference the weight of water for various scientific and technical calculations.