Star Bright Tea Co. purchases equipment with a cost of $54,400 and a trade-in value of $4,000. Star Bright Tea Co. estimates that the equipment will have a useful life of 7 years. What is the amount of depreciation for one month assuming the straight-line method?

Question

Quizplus · Accepted Answer

Depreciation expense = (Cost of equipment - Trade-in value) / Useful life= ($54,400 - $4,000) / 7 years= $50,400 / 7 years= $7,200 per year= $7,200 / 12 months= $600 per month