The Non-Current Asset Section of a Business's Balance Sheet Is

question 28

Multiple Choice

The non-current asset section of a business's balance sheet is below. These were the only depreciable assets owned by the business.During the current year the business sold equipment which it had purchased five years previously at a cost of $10,000.The accumulated depreciation on the equipment sold was $8,000 and the cash received from the sale was $3,000.There were no additions of equipment during the year.What was the depreciation expense recorded during the current year?

• A) $1,000
• B) $8,000
• C) $9,000
• D) Cannot be determined with the information provided

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Definitions:

Direct Method

A way of preparing the cash flow statement where actual cash flow information from the company's operations is used, as opposed to the indirect method which adjusts net income for accruals.

Accrued Interest

Interest that has been incurred but not yet paid or received at the end of the accounting period.

Maturity Date

The specified date on which the principal amount of a loan, bond, or other financial instrument is due to be paid in full.

Selling Price

The amount of money for which a product or service is sold to the customer.