An Asset Has a Cost of $50,000 with a Residual

question 2

Multiple Choice

An asset has a cost of $50,000 with a residual value of $10,000.It has a life of 5 years and was purchased on January 1.Its fourth full year of depreciation expense under double-declining-balance will be:

• A)$7,200.
• B)$4,320.
• C)$800.
• D)$0.

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Definitions:

Net Operating Income

The total profit of a company after operating expenses are subtracted from gross profit but before taxes and interest are deducted.

Absorption Costing

Accounting method that includes all manufacturing costs - direct materials, direct labor, and both variable and fixed manufacturing overhead - in the cost of a product.

Unit Product Cost

The cost calculated per unit, combining all expenses including materials, labor, and overhead related to the production.

Variable Costing

A method of accounting that comprises solely of variable production expenses, such as direct materials, direct labor, and variable manufacturing overhead, in the calculation of product costs.