Canliss Mining Uses the Retirement Method to Determine Depreciation on Its

question 145

Multiple Choice

Canliss Mining uses the retirement method to determine depreciation on its office equipment. During 2011, its first year of operations, office equipment was purchased at a cost of $14,000. Useful life of the equipment averages four years and no salvage value is anticipated. In 2013, equipment costing $5,000 was sold for $600 and replaced with new equipment costing $6,000. Canliss would record 2013 depreciation of:

• A)$3,500.
• B)$4,400.
• C)$5,400.
• D)None of the above is correct.

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Definitions:

Machine Hours

A measure of the amount of time a machine is used in the production process, often used as a basis for allocating overhead costs.

Allocation Base

A measure or criteria used to distribute costs or resources among different departments, products, or activities in a systematic manner.

Activity-Based Costing

Activity-based costing (ABC) is an accounting method that assigns overhead and indirect costs to specific activities, providing more accurate measures of the costs of producing specific products or services.

Activity Drivers

Factors that influence the costs and efficiency of business operations, serving as the basis for allocating expenses in activity-based costing.