On January 1, 2014, Gray Company Purchased a New Company

question 56

Multiple Choice

On January 1, 2014, Gray Company purchased a new company car for $36,000. The car has an expected salvage value of $6,000. The company estimates that the car will be driven 100,000 miles over its life and uses units of production to determine depreciation expense. The car was driven 20,000 miles in 2014. At the beginning of 2015 the company revised the estimated total life to 120,000 miles. If 26,000 miles were driven in 2015, the amount of depreciation expense for the year would be

• A) $7,800.
• B) $6,500.
• C) $6,240.
• D) $6,040.

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Definitions:

Business Cycle

Fluctuations in economic activity, such as employment and production

Stabilization Policy

Government strategies aimed at reducing economic volatility and maintaining stable economic growth, including measures such as fiscal and monetary policy adjustments.

Economists

Professionals who study the production, distribution, and consumption of goods and services, often analyzing economic issues and policies.

Lags

Delays between the initiation of a policy or action and its effects or outcomes.