Double Nickels Company purchased equipment for $9,000 on January 1, 2018. The company expects to use the equipment for 3 years. It has no salvage value. Monthly depreciation expense on the asset is

Question

Quizplus · Accepted Answer

To calculate monthly depreciation expense, we need to first calculate the total depreciation over the expected useful life of the equipment. Using the straight-line method:

Depreciation per year = (Cost of equipment - Salvage value) / Useful life 
Depreciation per year = ($9,000 - $0) / 3 years = $3,000

Monthly depreciation expense = Depreciation per year / 12 months 
Monthly depreciation expense = $3,000 / 12 months = $250

Therefore, the monthly depreciation expense is $250 (option B).

Double Nickels Company Purchased Equipment for $9,000 on January 1