On June 1, Scotter Company Purchased Equipment at a Cost

question 115

Multiple Choice

On June 1, Scotter Company purchased equipment at a cost of $120,000 that has a depreciable cost of $90,000 and an estimated useful life of three years or 30,000 hours.​Using straight-line depreciation, calculate depreciation expense for the first year, which ends on December 31.

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

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Definitions:

Tax Rate

The percentage at which an individual or corporation is taxed, which can vary based on income level, type of income, or legal jurisdiction.

Noncontrolling Interest

A minority ownership in a subsidiary, where the parent company owns the majority but not all of the subsidiary's shares.

Treasury Stock Approach

A method of accounting for repurchased shares of stock by reducing the total available shares in the market, often affecting the calculation of earnings per share and other metrics.

Patent

A government-granted right giving an inventor exclusive rights to make, use, or sell an invention for a certain number of years.