During Year 3, Stratton Inc

question 112

Multiple Choice

During Year 3, Stratton Inc. decided to change the useful life and residual value on equipment costing $400,000, based on new information about the equipment's operating capacity and market value. The equipment was purchased January 1, Year 2. The original estimated useful life and residual value were 10 years and $40,000 respectively; the new estimates are 8 years total useful life rather than 10 years, and $20,000 residual value. What is depreciation expense for the year ended December 31, Year 3 (rounded to the nearest dollar) ?

• A) $49,143
• B) $43,000
• C) $47,344
• D) $54,286

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Definitions:

Business Income

Revenue generated from the sale of goods or services related to the company's primary operations.

Immigration

Immigration is the action of coming to live permanently in a foreign country.

Total Output

The complete quantity of goods or services produced by an economy or firm within a specific period.

Labor Cost

The total amount of money that a business pays to its employees, a significant component of the overall production cost.