Paddle,Inc.purchased equipment for $14,760 on February 1,2018.The equipment has a useful life of 3 years.How much depreciation expense should Paddle recognize on its income statement for 2018?

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Quizplus · Accepted Answer

The equipment cost is $14,760 and has a useful life of 3 years. Depreciation for one full year would be $14,760 / 3 = $4,920. However, since the equipment was purchased on February 1, it was in use for 11 months in 2018. Thus, the depreciation for 2018 is ($4,920 / 12) * 11 = $4,510.