Canliss Mining uses the replacement method to determine depreciation on its office equipment. During 2016, its first year of operations, office equipment was purchased at a cost of $14,000. Useful life of the equipment averages four years and no salvage value is anticipated. In 2018, equipment costing $5,000 was sold for $600 and replaced with new equipment costing $6,000. Canliss would record 2018 depreciation of:
A) $3,500.
B) $4,400.
C) $5,400.
D) None of these answer choices are correct.

Question

Quizplus · Accepted Answer

Cost of replacement equipment of $6,000 less proceeds of $600 = $5,400.

Canliss Mining Uses the Replacement Method to Determine Depreciation on Its