Rotan Company Purchased a Van on January 1,2018,for $810,000

question 104

Multiple Choice

Rotan Company purchased a van on January 1,2018,for $810,000.Estimated life of the van was five years,and its estimated residual value was $98,000.Rotan uses the straight-line method of depreciation.At the beginning of 2020,the company revised the total estimated life of the asset from five years to six years.The estimated residual value remained the same as estimated earlier.Calculate the depreciation expense for 2020.

• A) $142,400
• B) $131,300
• C) $106,800
• D) $71,200

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Definitions:

Variable Costing

A cost accounting method that only includes variable production costs in the cost of goods sold, excluding fixed manufacturing overhead.

Net Operating Income

A measure of a company's profitability, calculated as the difference between its total revenue and its total operating expenses, excluding taxes and interest.

For The Month

A time-based reference indicating that an action, report, or measurement pertains to the duration of a specific month.

Variable Costing

An accounting method that includes only variable production costs in the cost of goods sold and treats fixed production costs as period expenses.