Chapter 11, Problem 11E

On May 10, 2019, Horan Company purchased equipment for $25,000. The equipment has an estimated service life of 5 years and zero residual value. Assume that the straight-line depreciation method is used.

Required:

Compute the depreciation expense for 2019 for each of the following four alternatives:

1. 1. Horan computes depreciation expense to the nearest day. (Use 12 months of 30 days each and round the daily depreciation rate to 2 decimal places.)
2. 2. Horan computes depreciation expense to the nearest month. Assets purchased in the first half of the month are considered owned for the whole month.
3. 3. Horan computes depreciation expense to the nearest whole year. Assets purchased in the first half of the year are considered owned for the whole year.
4. 4. Horan records one-half year’s depreciation expense on all assets purchased during the year.