On June 1, Aaron 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 and 30,000 hours, which ends on December 31.
Using straight-line depreciation, calculate depreciation expense for the final (partial) year of service.

A) $17,500
B) $30,000
C) $12,500
D) $40,000

Question

On June 1, Aaron 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 and 30,000 hours, which ends on December 31.  
Using straight-line depreciation, calculate depreciation expense for the final (partial) year of service.
 
A) $17,500
B) $30,000
C) $12,500
D) $40,000

Quizplus · Accepted Answer

Annual Depreciation = Depreciable Cost / Useful Life = $90,000 / 3 = $30,000
Depreciation expense for the final (partial) year of service = ($30,000 / 12) × 5 = $12,500

On June 1, Aaron Company Purchased Equipment at a Cost