On January 2,2016 McNally's Extra Corporation Acquired Equipment for $120,000

question 124

Multiple Choice

On January 2,2016 McNally's Extra Corporation acquired equipment for $120,000.The estimated life of the equipment is 5 years or 20,000 hours.The estimated residual value is $20,000.What is the amount of depreciation expense for 2017,if McNally's Extra Corporation uses the asset 4,000 hours and uses the units-of-production method of depreciation?

• A) $20,000
• B) $24,000
• C) $25,000
• D) $30,000

---

Definitions:

Accepted Methods

Refers to officially recognized or sanctioned techniques or procedures used in a particular field or discipline.

Days' Sales In Inventory

A financial metric that measures the average number of days a company takes to sell its inventory.

Ending Inventory

The value of unsold goods at the end of an accounting period.

Inventory Management

The supervision and control of ordering, storing, and using a company's inventory, both raw materials and finished products.