The following information is available on a depreciable asset: Purchase date January 1, Year 1 Purchase price $85,000 Salvage value $10,000 Useful life 10 years Depreciation method straight-line The asset's book value is $70,000 on January 1, Year 3. On that date, management determines that the as than the original estimate of $10,000. Based on this information, the amount of depreciation expense the be: Multiple Choice $8,750 D

The following information is available on a depreciable asset: Purchase date January 1, Year 1 Purchase price $85,000 Salvage value $10,000 Useful life 10 years Depreciation method straight-line The asset's book value is $70,000 on January 1, Year 3. On that date, management determines that the as than the original estimate of $10,000. Based on this information, the amount of depreciation expense the be: Multiple Choice $8,750 D

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Market Efficiency

Market efficiency refers to the market's ability to provide investors with all available information about investment options for buying and selling securities. Market efficiency reflects the true value of securities without undervaluing or overvaluing them. When the quality and quantity of information increase, the market becomes more efficient, allowing it to reduce arbitrage and obtain higher market returns from investment. In a well-functioning market, everyone receives all information completely and immediately at no cost. It opens up a plethora of opportunities for investors to access various investment options.

Question

Question 31

The following information is available on a depreciable asset:
Purchase date
January 1, Year 1
Purchase price
$85,000
$10,000
Salvage value
Useful life
10 years
Depreciation method
straight-line
The asset's book value is $70,000 on January 1, Year 3. On that date, management determines that the asset's salvage value should be $5,000 rather
than the original estimate of $10,000. Based on this information, the amount of depreciation expense the company should recognize during Year 3 would
be:
Multiple Choice
day
C
$8,750
$6,500
$8,125

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