On May 10, 2013, Horan Company purchased equipment for $25,000. The equipment has an estimated service life of 5 years and zero residual value. Assume that straight-line depreciation is used.

Required:

Compute the depreciation for 2013 for each of the following four alternatives:

1. Horan computes depreciation to the nearest day. (Use 12 months of 30 days each and round the daily depreciation rate to 2 decimal places.)

2. Horan computes depreciation to the nearest month. Assets purchased in the first half of the month are considered owned for the whole month.

3. Horan computes depreciation to the nearest whole year. Assets purchased in the first half of the year are considered owned for the whole year.

4. Horan records one-half year's depreciation on all assets purchased during the year.