Hudson Landscaping Service bought equipment for $9,600 on January 1, 2019. It has an estimated useful life of five years and zero residual value. Hudson uses the straight-line method to calculate depreciation and records depreciation expense in the books at the end of every month. As of June 30, 2019, the book value of this equipment shown on its balance sheet will be ________.
A) $8,640
B) $9,600
C) $10,560
D) $9,760

Question

Quizplus · Accepted Answer

The equipment depreciates at a rate of $9,600 / 5 years = $1,920 per year. Monthly depreciation is $1,920 / 12 = $160. For 6 months (January to June), the total depreciation is $160 * 6 = $960. The book value as of June 30, 2019, is $9,600 (initial cost) - $960 (accumulated depreciation) = $8,640.

Hudson Landscaping Service Bought Equipment for $9,600 on January 1