A Firm Is Considering Purchasing Two Assets

question 39

Multiple Choice

A firm is considering purchasing two assets.Asset A will have a useful life of 15 years and cost $3 million;it will have installation costs of $400,000 but no salvage or residual value.Asset B will have a useful life of 6 years and cost $1.3 million;it will have installation costs of $180,000 and a salvage or residual value of $300,000.Which asset will have a greater annual straight-line depreciation?

• A)Asset A has $30,000 more in depreciation per year.
• B)Asset A has $40,000 more in depreciation per year.
• C)Asset B has $30,000 more in depreciation per year.
• D)Asset B has $40,000 more in depreciation per year.

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Definitions:

Mixed-Attribute

A term not widely recognized as a standard financial or accounting term and requires further context for accurate definition. NO.

Asset

Resources owned by a business which have economic value and can be used to meet liabilities.

Board of Directors

The Board of Directors is a group of individuals elected to represent shareholders and oversee the activities and strategic direction of a company.