20 Points uestion 22 of 30 OnJanuary 12016 Racine Company pu

2.0 Points uestion 22 of 30 OnJanuary 1,2016, Racine Company purchased equipment that cost $55,000 cash. The equipment had an expected useful life of s 4,000.Assuming that Racine depreciates ts assets under the straight-ine method, t would ber yoars and an entimated savage value of the amount of depreciation expense appearing on the December 31, 2017 Income statement O A $9,167 ?C.$17,000 Benet Seiection 2.0 Ponts company expected to drive the truck 100,000 les The truck had an eetmated salvage value of $5,000. ir the truck is dniven 16,000 OA $11,440 C.$16.000 Reset Selection Mark for Review s This? 20 Points Air 20

Solution

1 Straight line depreciation = (Cost of asset - salvage value )/ Life of the asset Depreciation expense = (55000-4000) /6 8500 Depreciation expense 01-01-2016 2016 8500*12/12 8,500 2017 8500*12/12 8,500 Correct answer is D 8500 2 Units of production method Depreciation per item = (Cost of asset - salvage value )/ total miles Depreciation per item = (50000 - 5000 )/100000 Depreciation per hour 0.45 Depreciation expense Depreciation expense .45*16000 7200 Correct answer is D 7200