Canliss Mining uses the replacement method to determine depreciation on its office equipment. During 2009, its first

Question:

Canliss Mining uses the replacement method to determine depreciation on its office equipment. During 2009, its first year of operations, office equipment was purchased at a cost of $14,000. Useful life of the equipment averages 4 years and no salvage value is anticipated. In 2011, equipment costing $5,000 was sold for $600 and replaced with new equipment costing $6,000. Canliss would record 2011 depreciation of:

a. $3,500.00

b. $4,400.00

c. $5,400.00

d. None of the above.

Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...