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Gourmet Shop purchased cash registers on April 1 for $12,600. If this asset has an estimated...

Gourmet Shop purchased cash registers on April 1 for $12,600. If this asset has an estimated useful life of three years, what is the book value of the cash registers on May 31?

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Answer #1

Cost of cash registers = $12,600

Estimated useful life = 3 year

Annual depreciation expense = Cost of cash registers/Estimated useful life

= 12,600/3

= $4,200

Cash registers were purchased on April 1 and on May 31, it has been used for 2 months.

Depreciation expense for 2 month = Annual depreciation expense x 2/12

= 4,200 x 2/12

= $700

Book value of registers on May 31 = Cost of cash registers - Depreciation expense for 2 month

= 12,600 - 700

= $11,900

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