Deacon Company purchased equipment last year for $30,000.The equipment has an estimated useful life of five years.What amount will appear on the income statement for depreciation expense for the month of March 2016?

Question

Deacon Company purchased equipment last year for $30,000.The equipment has an estimated useful life of five years.What amount will appear on the income statement for depreciation expense for the month of March 2016?​

Quizplus · Accepted Answer

To calculate the amount of depreciation expense for the year, we divide the cost of the equipment by its useful life:
$30,000 ÷ 5 years = $6,000 per year.

To calculate the depreciation expense for the month of March, we divide $6,000 by 12 months:
$6,000 ÷ 12 = $500.

Therefore, the answer is B) $500.

Deacon Company Purchased Equipment Last Year for $30,000