Mac's Computer Skills Training,purchased equipment for $30,000 on January 1,20X8,and believes the equipment has a useful life of 36 months.What will be the effect of the equipment's depreciation on the balance sheet equation?

Question

Quizplus · Accepted Answer

Depreciation is the systematic allocation of the cost of tangible assets over their useful life. In this case, the equipment has a useful life of 36 months. As a result, Mac's Computer Skills Training will need to record depreciation expense each month for 36 months. The effect of depreciation on the balance sheet equation is that it decreases the value of the equipment account (a contra asset account) and decreases stockholders' equity, which is a component of the balance sheet equation. Therefore, option A is correct.

Mac's Computer Skills Training,purchased Equipment for $30,000 on January 1,20X8,and