On January 1, 2010, Masters and Masters Company purchased equipment for $30,000. The company is depreciating the equipment at the rate of $700 per month. The book value of the equipment at December 31, 2010 is
A) $0.
B) $8,400.
C) $21,600.
D) $30,000.

Question

Quizplus · Accepted Answer

Using the straight-line depreciation method, the annual depreciation for the equipment would be $8,400 ($700/month x 12 months). Since the equipment was purchased on January 1, 2010, it would be depreciated for 12 months by the end of the year. Therefore, the accumulated depreciation for the equipment would be $8,400. To find the book value of the equipment at December 31, 2010, we need to subtract the accumulated depreciation from the original cost: 
$30,000 - $8,400 = $21,600. Therefore, the book value of the equipment at December 31, 2010 is $21,600.

On January 1, 2010, Masters and Masters Company Purchased Equipment