An Asset Was Purchased for $58,000 and Originally Estimated to Have

question 229

Multiple Choice

An asset was purchased for $58,000 and originally estimated to have a useful life of 10 years with a residual value of $3,000. After two years of straight-line depreciation, it was determined that the remaining useful life of the asset was only 2 years with a residual value of $2,000. What will be the annual depreciation for the asset?

• A) $5,500
• B) $5,800
• C) $22,500
• D) $23,500

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Definitions:

Forward Integration

A business strategy where a company extends its operations by moving forward in the supply chain, acquiring or controlling the distribution centers or retailers.

Manufacturing Operation

A manufacturing operation involves the processes and activities related to the production of goods, typically on a large scale, incorporating human labor, machinery, and technology.

Strategic Channel Alliance

A collaboration between two or more organizations to use each other's distribution channels to sell their products, thereby extending their market reach.

Backward Integration

Backward Integration is a business strategy where a company expands its role to fulfill tasks formerly completed by businesses up the supply chain, often involving the acquisition of or merger with these businesses.