On June 1, Scotter Company Purchased Equipment at a Cost

question 157

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 3 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:

Dividends

Dividends are portions of a company's earnings paid to shareholders as a distribution of profits.

Non-Operating Activities

Transactions and events that are not related to the primary operations of a business, such as investment income or losses from the sale of assets.

Asset Disposals

The process of getting rid of an asset through sale, trade, or removal, often because it's obsolete, no longer needed, or to gain cash.

Interest Expense

The cost incurred by an entity for borrowed funds, represented as the interest payable on any type of debt.