1. The company computes depreciation to the nearest day. (Use 12 months of 30 days each.) 2. The company computes depreciation to the nearest month. Assets purchased in the first half of the month are considered owned for the whole month. 3. The company computes depreciation to the nearest whole year. Assets purchased in the first half of the month are considered owned for the whole year.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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On May 10, 2021, the Horan Company purchased equipment for P 25,000. The
equipment has an estimated service life of five years and zero residual value. Assume that
straight- line depreciation is used.
Required
Compute the depreciation for 2021 for each of the following four alternatives:
1. The company computes depreciation to the nearest day. (Use 12 months of 30 days
each.)
2. The company computes depreciation to the nearest month. Assets purchased in the
first half of the month are considered owned for the whole month.
3. The company computes depreciation to the nearest whole year. Assets purchased in
the first half of the month are considered owned for the whole year.
4. The company records one-half year’s depreciation on all assets purchased during the
year.

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