The Following Information Is Available on a Depreciable Asset Owned

question 94

Multiple Choice

The following information is available on a depreciable asset owned by First Bank & Trust:
Purchase date October 1,Year 1
Purchase price $85,000
Salvage value $10,000
Useful life 10 years
Depreciation method straight-line
The asset's book value is $70,000 on October 1,Year 3.On that date,management determines that the asset's salvage value should be $5,000 rather than the original estimate of $10,000.Based on this information,the amount of depreciation expense the company should recognize during the last three months of Year 3 would be:

• A)$2,187.50
• B)$1,718.75
• C)$2,031.25
• D)$2,321.43
• E)$1,964.29

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Definitions:

Dominant Firms

Companies that possess a major share of the market and typically have considerable power to influence market conditions and prices.

Low Entry Barriers

Characteristics of a market or industry that make it easy for new companies to start operations and compete.

Homogeneous Oligopoly

A market structure characterized by a few firms producing identical or very similar products, leading to significant inter-firm competition.

Identical Products

Products that are exactly the same in every feature, often used in economic models of perfect competition.