On April 8, 2009, Jupitor Corp. acquired equipment at a cost of $480,000. The equipment is to be depreciated by the straight-line method over six years with no provision for salvage value. Depreciation for fractional years is computed by rounding the ownership period to the nearest month. Depreciation expense recognized in 2009 will be:
A) $53,333.
B) $66,667.
C) $60,000.
D) $80,000.

Question

Quizplus · Accepted Answer

The equipment is depreciated over six years, so the annual depreciation is $480,000 / 6 = $80,000. Since the equipment was acquired in April, it was owned for 9 months in 2009. Therefore, the depreciation expense for 2009 is ($80,000 / 12) * 9 = $60,000.