The unrecovered depreciation which results due to poor estimates as to the life of the equipment is called ______. A. Sunk cost B. Economic life C. In-place value D. Annuity

The correct answer is: A. Sunk cost

Sunk costs are costs that have already been incurred and cannot be recovered. In the context of the question, the unrecovered depreciation is a sunk cost because it is a cost

that has already been incurred and cannot be recovered, even if the equipment is sold or disposed of.

The other options

are incorrect because:

• Economic life is the estimated period of time that an asset will be used.
• In-place value is the current market value of an asset.
• Annuity is a series of equal payments made at regular intervals for a fixed period of time.