A Company Purchased New Computers at a Cost of $14,000

question 15

Multiple Choice

A company purchased new computers at a cost of $14,000 on September 30. The computers are estimated to have a useful life of 4 years and a residual value of $2,000. The company uses the straight-line method of depreciation. How much depreciation expense will be recorded for the computers for the first year ended December 31?

• A) $250
• B) $750
• C) $875
• D) $1,000
• E) $3,000

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Definitions:

Open Market

A venue or environment in which financial securities, commodities, and assets are bought and sold without restrictions.

Government Securities

Financial instruments issued by a government to finance its projects and operations, commonly involving debt securities like bonds.

Interest Rates

The segment of a loan assessed as interest for the borrower, traditionally displayed as a yearly percentage of the loan's outstanding amount.

Tight Money Policy

A monetary policy that makes borrowing money more expensive and less accessible in order to reduce inflation.