Henry Tax Planning Service bought production equipment for $9,600 on January 1, 2015. It has an estimated useful life of 5 years and zero residual value. Henry uses the straight-line method to calculate depreciation and records depreciation expense in the books at the end of every month. As of June 30, 2015, the book value of this equipment shown on Henry's balance sheet will be:

Question

Quizplus · Accepted Answer

The annual depreciation expense is $9,600 / 5 = $1,920. Monthly depreciation is $1,920 / 12 = $160. For 6 months, depreciation is $160 * 6 = $960. The book value as of June 30, 2015, is $9,600 - $960 = $8,640.

Henry Tax Planning Service Bought Production Equipment for $9,600 on January