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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. $17,500b. $12,500c. $30,000d. $40,000

Respuesta :

Answer:

Depreciation expense = $12,500

so correct option is b. $12,50

Explanation:

given data

equipment cost = $120,000

depreciable cost = $90,000

useful life = 3 years

to find out

depreciation expense for the final year of service

solution

first we get here annual depreciation that is express as

annual depreciation = Depreciable cost ÷Useful life  ................1

put here value

annual depreciation = [tex]\frac{90000}{3}[/tex]

annual depreciation = $30,000

and here asset life is From June 1 in first year to May 31 in 3rd year and anuary 1 to May 31 is  5 months

so Depreciation expense for the final will be

Depreciation expense for the final = (Annual deprecation ÷ 12 months) × Asset used in months     ......................2

put here value

Depreciation expense = [tex]\frac{30000}{12}[/tex] × 5

Depreciation expense = $12,500

so correct option is b. $12,500

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