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Question - Kate Company purchased a tractor at a cost of $180,000. The tractor has an estimated salvage value of $20,000 and an estimated life of 8 years, or 12,000 hours of operation. The tractor was purchased on January 1, 2016 and was used 2,400 hours in 2016 and 2,200 hours in 2017.
What amount will Kate Company report as depreciation expense over the 8-year life of the equipment using straight-line depreciation?
A) $25,000
B) $40,000
C) $180,000
D) $160,000
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