On June 1,Scotter Company purchased equipment at a cost of $120,000 that has a depreciable cost of $90,000 and an estimated useful life of 3 years or 30,000 hours. Using straight-line depreciation,calculate depreciation expense for the first year.
A)$12,500
B)$30,000
C)$17,500
D)$40,000

Question

Quizplus · Accepted Answer

To calculate depreciation expense using straight-line depreciation, divide the depreciable cost by the estimated useful life:
$90,000 / 3 years = $30,000 per year

Therefore, the depreciation expense for the first year is:
$30,000 / 12 months = $2,500 per month
$2,500 per month x 7 months (June-December) = $17,500

So, the best choice is C, $17,500.

On June 1,Scotter Company Purchased Equipment at a Cost of $120,000