On June 1, 2014, Aaron Company Purchased Equipment at a Cost

question 87

Multiple Choice

On June 1, 2014, 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. Using straight line depreciation, calculate depreciation expense for the second year.

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

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Definitions:

Revenue Accounts

Accounts that track the income earned from the sale of products or services.

Capital

Capital refers to the financial resources that businesses use to fund their operations and grow, including equity, debt, and retained earnings.

Assets

Resources owned by a company that have economic value and are expected to provide future benefits.

Rent Expense

The cost incurred by a business for leasing a property or equipment for operational purposes.