page 20 of 20\nquestion 20\n5 points\non june 1, scotter company purchased equipment at a cost of $120,000…

page 20 of 20\nquestion 20\n5 points\non june 1, scotter company purchased equipment at a cost of $120,000 that has a depreciable cost of $90,000 and\nan estimated useful life of 3 years or 30,000 hours.\nusing straight - line depreciation, compute depreciation expense for the first year, which ends on december 31.\na $17,500\nb $30,000\nc $12,500\nd $40,000\nadditional content

page 20 of 20\nquestion 20\n5 points\non june 1, scotter company purchased equipment at a cost of $120,000 that has a depreciable cost of $90,000 and\nan estimated useful life of 3 years or 30,000 hours.\nusing straight - line depreciation, compute depreciation expense for the first year, which ends on december 31.\na $17,500\nb $30,000\nc $12,500\nd $40,000\nadditional content

Answer

Explanation:

Step1: Calculate annual depreciation

The formula for straight - line depreciation is (Annual\ Depreciation=\frac{Depreciable\ Cost}{Useful\ Life}). Given depreciable cost (=$90,000) and useful life ( = 3) years. (Annual\ Depreciation=\frac{90000}{3}=$30,000) per year.

Step2: Calculate depreciation for the first - year (7 months from June 1 to December 31)

Since the equipment is purchased on June 1, the first - year (ending December 31) has a partial - year usage. The fraction of the year is (\frac{7}{12}). (Depreciation\ Expense=30000\times\frac{7}{12}) (Depreciation\ Expense = 17500)

Answer:

A. $17,500