Minor Company Installs a Machine in Its Factory at the Beginning

question 159

Multiple Choice

Minor Company installs a machine in its factory at the beginning of the year at a cost of $135,000.The machine's useful life is estimated to be 5 years,or 300,000 units of product,with a $15,000 salvage value.During its first year,the machine produces 64,500 units of product.Determine the machines' first year depreciation under the double-declining-balance method.

• A)$66,000.
• B)$54,000.
• C)$24,000.
• D)$25,800.
• E)$48,000.

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Definitions:

FOB Shipping Point

A term indicating that the buyer takes responsibility for goods and their transportation costs once they leave the seller's premises.

Net Income

The final amount a company earns, following the deduction of all expenditures and taxes from its total revenue.

Ending Inventory

The cost of inventory on hand for selling at the conclusion of an accounting cycle.

Consignment

A business arrangement wherein goods are left in the possession of an authorized third party to sell, but ownership remains with the supplier until items are sold.