Double Nickels Company purchased equipment for $9,000 on January 1, 2015. 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 the monthly depreciation, we need to use the straight-line depreciation method, which is:

Depreciation Expense = (Cost of asset - Salvage value) / Useful life

Since the equipment has no salvage value, the formula becomes:

Depreciation Expense = Cost of asset / Useful life

Thus, the monthly depreciation expense is:

$9,000 / (3 years * 12 months per year) = $250 per month.

Therefore, the correct choice is B.

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