The Following Information Is Available on a Depreciable Asset Owned

question 198

Multiple Choice

The following information is available on a depreciable asset owned by Mutual Savings Bank:
$$\begin{array} { | l | l | } \hline \text { Purchase date } & \text { July } 1 , \text { Year } 1 \\\hline \text { Purchase price } & \$ 85,000 \\\hline \text { Salvage value } & \$ 10,000 \\\hline \text { Useful life } & 10 \text { years } \\\hline \text { Depreciation method } & \text { straight-line } \\\hline\end{array}$$
The asset's book value is $70,000 on July 1,Year 3.On that date,management determines that the asset's salvage value should be $5,000 rather than the original estimate of $10,000.Based on this information,the amount of depreciation expense the company should recognize during the last six months of Year 3 would be:

• A) $8,125.00
• B) $7,375.00
• C) $4,062.50
• D) $3,750.00
• E) $7,812.50

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Definitions:

Growth Rate

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Beta

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