Hill has a fiscal year-end of December 31. Hill purchased a piece of equipment for $12,000 in February with a four-year useful life and a zero residual value. Hill used the equipment to produce finished goods in March that were sold on credit in April with cash collected in May. Hill uses straight-line depreciation. The amount of depreciation expense affecting the reported income on the first quarter income statement was

Question

Quizplus · Accepted Answer

Since Hill's fiscal year-end is December 31, Q1 would be January - March. The equipment was purchased in February and therefore was not used in Q1. As a result, there is no depreciation expense affecting the reported income on the Q1 income statement.

Hill Has a Fiscal Year-End of December 31