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

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Definitions:

Production Era

A historical period in business where the focus was on production capabilities and efficiencies, with the belief that any product made efficiently and of good quality would sell.

Quality Products

Products that consistently meet or exceed customer expectations regarding their functionality, durability, and reliability.

Possession Utility

The value added by the process of transferring the ownership of a product or service from one party to another, enhancing its appeal to potential buyers.

Ownership Utility

The added value or benefit provided to a product or service by ensuring that the consumer has the legal right or ownership to use or dispose of it as they see fit.