Canliss Mining Uses the Replacement Method to Determine Depreciation on Its

question 14

Multiple Choice

Canliss Mining uses the replacement 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.

---

Definitions:

VCR

A video cassette recorder, a device once commonly used to play and record television programs and movies on magnetic tape.

Perfect Substitutes

Goods or services that can be used in exactly the same way, thus one can completely replace another in consumption.

Marginal Rate of Substitution

The speed at which a consumer is prepared to exchange one product for another while keeping their overall satisfaction constant.

Utility Maximizing

The process or behavior of consumers attempting to get the greatest amount of satisfaction from their consumption choices, subject to their income and the prices of goods and services.