Pablo Purchased a Lathe on January 1, 2007, at a Cost

question 49

Multiple Choice

Pablo purchased a lathe on January 1, 2007, at a cost of $45,000. At the time of purchase, the lathe was expected to have a five-year economic life and a residual value of $3,000. Pablo uses straight-line depreciation. At the beginning of 2009, Pablo estimated the lathe to have a remaining life of four years with no residual value. For the year ended December 31, 2009, Pablo would report depreciation of:

• A)$7,500.
• B)$7,050.
• C)$7,000.
• D)$6,750.

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Definitions:

Scoring

The process of assigning a value to responses or performances in assessments or competitions.

Correlation

A statistical measure that describes the extent to which two variables change together, but does not necessarily imply causation.

Cause-And-Effect

The principle that an action or event will produce a certain response or effect in the form of another event.

Negative Correlation

A relationship between two variables where one variable increases as the other decreases, and vice versa.