Cutter Enterprises purchased equipment for $72,000 on January 1, 2021. The equipment is expected to have a five-year life and a residual value of $6,000. Using the double-declining-balance method, depreciation for 2021 and the book value at December 31, 2021, would be: O $26,400 and $39,600 respectively. O $26,400 and $45,600 respectively. O $28,800 and $37,200 respectively. O $28,800 and $43,200 respectively.
Cutter Enterprises purchased equipment for $72,000 on January 1, 2021. The equipment is expected to have a five-year life and a residual value of $6,000. Using the double-declining-balance method, depreciation for 2021 and the book value at December 31, 2021, would be: O $26,400 and $39,600 respectively. O $26,400 and $45,600 respectively. O $28,800 and $37,200 respectively. O $28,800 and $43,200 respectively.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:**Question:**
A company may capitalize interest on all of the following assets during the construction period with the exception of which of the following?
A. High-end manufactured inventory
B. Land improvements
C. New office building for employees
D. Real estate development project intended for future sale
**Options:**
- O A
- O D
- O A and B
- O C
This question asks about the capitalizing of interest costs during the construction period, and which assets this applies to, with one exception. The format provides a list of asset types (A–D) and multiple-choice options to select the correct exception.

Transcribed Image Text:Cutter Enterprises purchased equipment for $72,000 on January 1, 2021. The equipment is expected to have a five-year life and a residual value of $6,000.
Using the double-declining-balance method, depreciation for 2021 and the book value at December 31, 2021, would be:
- ○ $26,400 and $39,600 respectively.
- ○ $26,400 and $45,600 respectively.
- ○ $28,800 and $37,200 respectively.
- ○ $28,800 and $43,200 respectively.
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