Q1. A machine has a cost of $18,000, an estimated salvage value of $3,000, and an estimated useful life of five years. The machine is being depreciated on a straight-line basis. At the beginning of the fourth year, after depreciation had been recorded for three years, it is estimated the machine will last four years from that point and is still expected to have $3,000 of salvage value. What is the revised annual depreciation?
A) $750
B) $1,500
C) $1,800
D) $2,143
Q2. A franchise was purchased for $100,000 and had a finite useful life of 10 years. Annual franchise payments of $12,500 are also required. The total annual expense associated with this franchise is:
A) $10,000
B) $11,250
C) $12,500
D) $22,500