A Company Owns an Operational Asset Acquired on January 1

question 11

Multiple Choice

A company owns an operational asset acquired on January 1, 2006 at a cost of $10,000. It had an estimated useful life of 5 years, no residual value, and was being depreciated on a straight-line basis. On December 31, 2007, it was determined that the total useful life would be 4 years. The following adjusting entry (assuming no adjusting entries have been made) for the accounting year ended December 31, 2007 should be made (rounded to the nearest dollar) : $\begin{array}{|l|l|l|l|}\hline 1&\text { Depreciation expense } & 2,667 & \\\hline &\text { Accumulated depreciation } & & 2,667 \\\hline 2&\text { Depreciation expense } & 2,000 & \\\hline &\text { Accumulated depreciation } & & 2,000 \\\hline 3&\text { Retained Earnings } & 500 & \\\hline &\text { Accumulated depreciation } & & 500 \\\hline 4&\text { Retained Earnings } & 667 & \\\hline &\text { Accumulated depreciation } & & 667 \\\hline\end{array}$

• A) Choice 1
• B) Choice 2
• C) Choice 3
• D) Choice 4

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Definitions:

Stop Pushbutton

A control button used to halt or stop a machine or process, often designed to be easily accessible and requiring manual activation.

Start Pushbutton

A button that, when pressed, initiates the starting sequence of a machine or device.

Control Circuit

An electrical circuit designed to control the operation of a device by regulating the flow of electricity to it.

Analog Inputs

Inputs that can receive and process analog signals, converting physical phenomena like temperature or pressure into a readable format by an electronic device.