A Company Purchased a Computer on July 1,2012

question 5

Multiple Choice

A company purchased a computer on July 1,2012.The computer has an estimated useful life of 5 years and will have no salvage value.It was purchased for $10,000.It is estimated that the computer can be used for 5,000 hours.The computer was used for 450 hours during 2012.If the goal is to record higher depreciation expense in the earlier years,which method should be used?

• A) Units-of-production
• B) Straight-line
• C) Double-declining-balance
• D) First-In, First-Out

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Definitions:

Installment Sales Method

An accounting method used to recognize revenue from sales where payment is received in installments over a period.

IFRS

International Financial Reporting Standards, a set of accounting standards developed by the International Accounting Standards Board (IASB) aimed at making global financial reporting more transparent and comparable.

Realized Gross Profit

The portion of profit that has been earned from completed sales transactions, excluding unrealized profits from continuing transactions.

Bundled Sales Transactions

sales deals that involve multiple products or services sold together at a combined price, potentially affecting revenue recognition and reporting.