The Cost of an Asset Is $1,000,000 and Its Residual

question 17

Multiple Choice

The cost of an asset is $1,000,000 and its residual value is $100,000.Estimated useful life of the asset is four years.Calculate depreciation for the second year using the double-declining-balance method of depreciation.

• A)$250,000
• B)$225,000
• C)$450,000
• D)$240,000

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Definitions:

Grossly Negligent

A severe lack of care or the extreme departure from the care a reasonable person would exercise in a similar situation, often resulting in harm or damage.

Actual Fraud

Deliberate deception by one party to secure unfair or unlawful gain, or to deprive another party of a legal right.

Ultramares Rule

A legal principle that limits the liability of accountants for negligence to parties with whom they are in direct contractual relationship unless fraud is involved.

Duty of Care

A legal obligation requiring individuals and entities to exercise a reasonable standard of care to avoid causing harm to others.