Acme, Inc.'s balance sheet shows Equipment at a cost of $5,000,000. Accumulated Depreciation is $2,000,000. Acme's income statement shows Depreciation Expense of $200,000 for the year. Which of the following statements is true? A) 40% of the equipment's economic benefits have been used up so farB) 4% of the equipment's economic benefits have been used up so farC) at this rate, the equipment will never be fully depreciatedD) there must be a mistake because depreciation expense is less than accumulated depreciation

Question

Kamren

Business

7 December, 10:20

Acme, Inc.'s balance sheet shows Equipment at a cost of $5,000,000. Accumulated Depreciation is $2,000,000. Acme's income statement shows Depreciation Expense of $200,000 for the year. Which of the following statements is true? A) 40% of the equipment's economic benefits have been used up so farB) 4% of the equipment's economic benefits have been used up so farC) at this rate, the equipment will never be fully depreciatedD) there must be a mistake because depreciation expense is less than accumulated depreciation

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Answers (1)

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Ryder · Answer 1

Answer:A. 40% of the equipments economic benefits have been used up so far.

Explanation:

$2,000,000 which is the accumulated depreciation represents 40% of the cost of the asset of $5,000,000