Question

Use the information below to answer the questions that follow. Enter your answers using digits only - no dollar signs, commas, or decimal points. The business's year-end is December 31. Cost of equipment = 269000 Useful life in years = 8 Residual value = 5000 Date purchased = November 1 What is the depreciation expense per year and what about the depreciation expense per month? and the depreciation expense in the year of purchase?

Answer 1

Given:

Cost of equipment = 269000

Useful life in years = 8

Residual value = 5000

Date purchased = November 1

(a) Depreciation expense per year = (Cost - Residual value) / Useful life = (269000 - 5000) / 8 = $33,000

Depreciation expense per year = $33,000

(b) Depreciation expense per month = 33000 / 12 = $2,750

Depreciation expense per month = $2,750

(c) Period from date of purchase to end of business year = 2 months

Depreciation expense in the year of purchase = 2750 * 2 = $5.500

Depreciation expense in the year of purchase = $5.500