Fellingham Corporation Purchased Equipment on January 1, 2007, for $200,000

question 37

Multiple Choice

Fellingham Corporation purchased equipment on January 1, 2007, for $200,000. The company estimated the equipment would have a useful life of 10 years with a $20,000 residual value. Fellingham uses the straight-line depreciation method. Early in 2009, Fellingham reassessed the equipment's condition and determined that its total useful life would be only six years in total and that it would have no salvage value. How much would Fellingham report as depreciation on this equipment for 2009?

• A)$24,000
• B)$27,333
• C)$36,000
• D)$41,000 This is a change in estimate, so the remaining deprecation will be spread over the remaining useful life.Accumulated depreciation at 12/31/08 = 2 [($200,000 20,000) 10] = $36,000
• Book value at 12/31/08 = $200,000 36,000 = $164,000
• Annual depreciation after change in estimate = $164,000 4 = $41,000

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Definitions:

Gram-positive

Refers to bacteria that retain the color of the crystal violet stain used in the Gram staining method, indicating a thicker peptidoglycan cell wall.

Gram-variable

Refers to bacteria that do not consistently stain as gram-positive or gram-negative because of variability in the structure of their cell wall.

Clostridium Tetani

A bacterium that causes tetanus, characterized by muscle stiffness and convulsions, contracted through wound infections.

Gram-positive

Refers to bacteria that retain the crystal violet stain used in Gram's method of staining, indicative of a thick layer of peptidoglycan in the bacterial cell wall.