A Company Purchases for $48,000 an Asset That Has a Useful

question 170

Multiple Choice

A company purchases for $48,000 an asset that has a useful life of six years and no salvage value.After two years,the company spends $8,000 for a major overhaul that will extend the machine's useful life four years beyond the original six.Assuming straight-line depreciation,how much depreciation should be taken in year 3?

• A)$4,000
• B)$5,000
• C)$5,600
• D)$8,000

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Definitions:

Objectively Demonstrated

Information or evidence presented in a manner that is observable and verifiable by others, not influenced by personal feelings or opinions.

Unclear

Not easy to see, understand, or distinguish; not obvious or definite.

Valid Acceptance

An unqualified expression of assent to the terms of an offer, forming a contract.

Present Intent

A legal term indicating a person's current intention to perform an act or designate a legal status to an item of property.