Seall-Test Ltd

question 116

Multiple Choice

Seall-Test Ltd. owns a machine that it purchased on Jan 1, 2010 for $600,000. The machine had an estimated useful life of 10 years and an estimated residual value of $100,000. The company uses the declining balance method with a rate of 20%. The machine was sold on December 31, 2012 for $140,000. What was the depreciation expense for 2011?

• A)$50,000
• B)$60,000
• C)$96,000
• D)$120,000

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Definitions:

Perpetual Inventory

A method of accounting for inventory that records the sale or purchase of inventory immediately through the use of computerized point-of-sale systems and enterprise asset management software.

Subsidiary Ledgers

Detailed ledgers that contain information supporting entries recorded in a general ledger, such as accounts receivable or accounts payable details.

Job Order Costing

An accounting methodology used for assigning manufacturing costs to an individual product or batches of products, typically when each product's construction is sufficiently unique.

Process Cost Accounting

A method of accounting used for goods produced continuously, assigning costs to units of output.