A Company Used Straight-Line Depreciation for an Item of Equipment

question 92

Multiple Choice

A company used straight-line depreciation for an item of equipment that cost $12,000,had a salvage value of $2,000,and had a five-year useful life.After depreciating the asset for three complete years,the salvage value was reduced to $1,200 and its total useful life was increased from five years to six years.Determine the amount of depreciation to be charged against the machine during each of the remaining years of its useful life:

• A)$1,000
• B)$1,800
• C)$1,467
• D)$1,600
• E)$2,160

Recognize the key accounting assumptions and how they affect financial reporting.

Identify the characteristics and implications of different types of accounting periods.

Comprehend the principles guiding revenue and expense recognition.

Discern between different accounting methodologies (accrual vs. cash basis) and their acceptance under GAAP.

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