Deacon Company purchased equipment last year for $30,000.The equipment has an estimated useful life of five years and no salvage value.What amount will appear on the income statement for depreciation expense for the month of March 2017?

Question

Deacon Company purchased equipment last year for $30,000.The equipment has an estimated useful life of five years and no salvage value.What amount will appear on the income statement for depreciation expense for the month of March 2017?​

Quizplus · Accepted Answer

The depreciation expense for one month is calculated by dividing the cost of the equipment by its useful life in months. Since the equipment costs $30,000 and has a useful life of 5 years (or 60 months), the monthly depreciation expense is $30,000 / 60 = $500.

Deacon Company Purchased Equipment Last Year for $30,000