Henry Tax Planning Service bought computer equipment for $24,000 on January 1, 2014. It has an estimated useful life of 4 years and zero residual value. Henry uses the straight-line method to calculate depreciation and records depreciation expense in the books at the end of every month. Calculate the amount of Depreciation Expense for the period, January 1, 2014 through September 30, 2014, for this equipment.
A)$6,000
B)$4,500
C)$6,500
D)$5,000

Question

Quizplus · Accepted Answer

The first step is to calculate the total depreciation for the equipment, which is the cost of the asset divided by its useful life:
Depreciation per year = Cost of asset / Useful life
Depreciation per year = $24,000 / 4 years
Depreciation per year = $6,000

To calculate the depreciation expense for the period January 1, 2014 through September 30, 2014, we need to determine the number of months that have elapsed from the purchase date, which is 9 months:
Depreciation expense = (Depreciation per year / 12 months) x number of months
Depreciation expense = ($6,000 / 12) x 9
Depreciation expense = $4,500

Therefore, the amount of Depreciation Expense for the period, January 1, 2014 through September 30, 2014, for this equipment is $4,500 (option B).

Henry Tax Planning Service Bought Computer Equipment for $24,000 on January