Hank's Tax Planning Service bought communications equipment for $7 200 on 1 January 2013. It has an estimated useful life of 5 years. Hank records depreciation monthly. As of 30 June 2013, Hank's balance sheet will show a carrying value for this equipment of:

Question

Quizplus · Accepted Answer

The equipment depreciates over 5 years, which is 60 months. Monthly depreciation is $7,200 / 60 = $120. By 30 June 2013, 6 months have passed, so accumulated depreciation is 6 * $120 = $720. The carrying value is $7,200 - $720 = $6,480.

Hank's Tax Planning Service Bought Communications Equipment for $7 200