Buggy Company Purchased Equipment on June 3, 2012, for $100,000

question 167

Multiple Choice

Buggy Company purchased equipment on June 3, 2012, for $100,000. The residual value is zero and the estimated life is 10 years. Compute depreciation expense for the year ending December 31, 2012, if the company uses the straight-line method of depreciation.

• A) $5,000
• B) $5,833
• C) $7,500
• D) $10,000

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Definitions:

Abandoned Building

An Abandoned Building is a property that has been left vacant and unattended by its owner, often leading to deterioration and neglect.

Appraisals

The process of professionally estimating the value of a particular item, such as real estate or a business.

Book Value

The net value of a company's assets minus its liabilities, often used to assess the company's worth in financial analysis.

Present Value Factor

Present value factor is a multiplier used in calculating the present value of a future sum of money or stream of cash flows, given a specified rate of return.