Castle Rock Owns a Machine That It Purchased on Jan

question 87

Multiple Choice

Castle Rock owns a machine that it purchased on Jan 1, 2019 for $400,000. The machine had an estimated useful life of 10 years with a production capacity for 80,000 units and was expected to have no residual value. The company uses the units-of-production method to record depreciation. The machine produced 15,000 units in 2019, 18,000 units in 2020 and 25,000 units in 2021. The machine was sold on December 31, 2021 for $350,000. What was the depreciation expense for 2021?

• A)$39,000
• B)$40,000
• C)$90,000
• D)$125,000

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Definitions:

Face Amount

The face amount is the nominal or dollar value printed on a financial instrument like a bond or insurance policy, representing the amount due at maturity or the coverage amount.

Bond Redemption

A financial term referring to the process of repaying the principal amount of a bond at its maturity date.

Market Value

Market value refers to the price at which an asset would trade in a competitive auction setting.

Present Value

The current value of a future sum of money or stream of cash flows given a specified rate of return.