Use the Following to Answer Questions

question 3

Multiple Choice

Use the following to answer questions
Jing Company was started on January 1,2016 when it issued common stock for $50,000 cash.Also,on January 1,2016 the company purchased office equipment that cost $34,000 cash.The equipment was delivered under terms FOB shipping point,and transportation cost was $2,000.The equipment had a five-year useful life and a $12,000 expected salvage value.
-At the end of 2020,assuming the equipment had not been sold,the book value of the office equipment using straight-line depreciation and double-declining balance depreciation,respectively,would be:

• A)$12,000/$1,680.
• B)$12,000/$12,000.
• C)$0/$0.
• D)None of these answer choices are correct.

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Definitions:

Capital-Intensive

A business process or industry that requires large amounts of money to produce goods or services, often due to high costs of machinery and equipment.

Machinery

Physical devices or equipment designed to perform specific tasks in industrial or commercial settings, often part of the fixed assets of a business.

Soft Rationing

The situation that occurs when units in a business are allocated a certain amount of financing for capital budgeting.

Hard Rationing

The situation that occurs when a business cannot raise financing for a project under any circumstances.