In January,Fanning Corporation Entered into a Contract to Acquire a New

question 14

Multiple Choice

In January,Fanning Corporation entered into a contract to acquire a new machine for its factory.The machine,which had a cash price of $400,000,was paid for as follows: Prior to the machine's use,installation costs of $10,000 were incurred.The machine has an estimated useful life of ten years and an estimated salvage value of $10,000.What should Hunter record as depreciation expense for the first year under the straight-line method?

• A) $38,100
• B) $39,100
• C) $40,000
• D) $41,000

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Definitions:

Equity Method

Equity Method is an accounting technique used by companies to record investments in other companies, recognizing income or loss based on the investee's performance and adjusting the investment's value accordingly.

Consolidating

The process of combining financial statements of separate entities within a corporate group to present as if they were a single economic entity.

Capital Fund

A fund dedicated to financing long-term investment projects or for acquiring fixed assets.

Unrestricted Contribution

Donations or funding received without stipulations on how they must be spent, allowing the recipient discretion in their use.