Helm Corporation Purchased a Machine with an Initial Cost of $80,000,a

question 149

Multiple Choice

Helm Corporation purchased a machine with an initial cost of $80,000,a residual value of $5,000,and an estimated useful life of 10 years.At the beginning of the fifth year,Helm spent $10,000 for an extraordinary repair.Following the repair,Helm estimated that the machine had a remaining useful life of 8 years,and that the residual value was unchanged.Calculate depreciation expense on the machine for the fifth year,assuming that Helm uses the straight-line method.

• A)$5,625
• B)$6,875
• C)$7,250
• D)$7,500

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Definitions:

Law of Increasing Opportunity Costs

An economic principle that states as production of a good or service increases, the opportunity cost of producing another unit also increases.

Particular Good

A specific item or product that satisfies consumers' needs or wants, distinguishable from general categories or types of goods.

Market Price

The current price at which an asset or service can be bought or sold in a market.

Production Possibilities Curve

A graphical representation that shows the maximum number of goods or services that can be produced using limited resources efficiently.