Squirrel Co $\begin{array} { l r } \text { Depreciation Expense } & \$ 3,600 \\\text { Equipment } & \$ 3,600\end{array}$

question 27

Multiple Choice

Squirrel Co. purchases equipment with a cost of $20,000 and a trade-in value of $2,000. Squirrel Co. estimates that the equipment will have a useful life of 5 years. Assuming Squirrel Co. records depreciation for the entire year, the adjusting entry would be recorded as

• A)
• \(\begin{array} { l r }
• \text { Depreciation Expense } & \$ 3,600 \\
• \text { Equipment } & \$ 3,600
• \end{array}\)
• B)
• \(\begin{array} { l r }
• \text { Accumulated Depreciation } & \$ 3,600 \\
• \text { Depreciation Expense } & \$ 3,600
• \end{array}\)
• C)
• \(\begin{array} { l c }
• \text { Depreciation Expense } & \$ 3,600 \\
• \text { Cash } & \$ 3,600
• \end{array}\)
• D)
• \(\begin{array} { l r }
• \text { Depreciation Expense } & \$ 3,600 \\
• \text { Accumulated Depreciation } & \$ 3,600
• \end{array}\)

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Definitions:

Competitive Nature

Refers to the inherent characteristics of businesses or markets where entities compete against each other to gain customers, market share, or achieve a competitive advantage.

Vertical Merger

A merger between two or more companies operating at different levels within an industry's supply chain, aimed at creating more synergies or reducing costs.

Competitor

A person or entity that competes with another, particularly in business or in the offering of goods and services.

Capital Structure

Capital structure is the mixture of a company's long-term debt, specific short-term debt, common equity, and preferred equity which finance its overall operations and growth.