An Asset Was Purchased for $120,000 on January 1,Year 1

question 87

Multiple Choice

An asset was purchased for $120,000 on January 1,Year 1 and originally estimated to have a useful life of 10 years with a residual value of $10,000.At the beginning of the third year,it was determined that the remaining useful life of the asset was only 4 years with a residual value of $2,000.Calculate the third-year depreciation expense using the revised amounts and straight-line method.

• A)$24,000
• B)$25,000
• C)$11,000
• D)$24,500

---

Definitions:

Direct Labor Costs

Expenses associated with the labor directly involved in producing a product or delivering a service.

Costing System

A method or procedure employed to collect, classify, and allocate costs to products, services, or job orders.

Job-Order Costing

An accounting method that assigns costs to specific production jobs or batches, making it possible to track the cost of each job individually.

Direct Labor Costs

Wages paid to workers directly involved in manufacturing a product or providing a service.