A Depreciable Asset Currently Has a $40,100 Book Value

question 121

Multiple Choice

A depreciable asset currently has a $40,100 book value.The company owning the asset uses straight-line depreciation.They paid $70,000 for this asset and consider it to have a $1,000 salvage value with a twelve year useful life.How long has the company owned this asset?

• A)5.2 years
• B)7 years
• C)10.2 years
• D)12 years
• E)Cannot be determined from the given information

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Definitions:

Actual Expenses

The real or verified costs incurred during a specific period for operations, projects, or activities.

Accounting Costs

The actual expenses and cash outflows that a business incurs, captured in its financial records.

Implicit Costs

The opportunity costs of using resources owned by the firm for its current purposes rather than the next best alternative uses.

Accounting Profits

Accounting profits refer to the net earnings of a company as calculated by subtracting total expenses from total revenues, using standard accounting principles.