Warren Company Plans to Depreciate a New Building Using the Double

question 23

Multiple Choice

Warren Company plans to depreciate a new building using the double declining-balance depreciation method. The building cost $800,000. The estimated residual value of the building is $50,000 and it has an expected useful life of 25 years. Assuming the first year's depreciation expense was recorded properly, what would be the amount of depreciation expense for the second year?

• A)$30,720.
• B)$32,000.
• C)$58,880.
• D)$64,000.

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Definitions:

Externality

A cost or benefit that affects a party who did not choose to incur that cost or benefit, often leading to market failure.

Vaccinations

A medical intervention that uses a vaccine to stimulate an individual's immune system to develop immunity to a specific disease.

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To transmit means to send or convey information, energy, or matter from one place or thing to another.

Market Power

The ability of a firm or group of firms to control prices or exclude competition within a market.