By what amount will the book value of the office equipment decline after the appropriate December adjustment is recorded?
A)$1,560
B)$130
C)$0
D)$1,430

Question

Quizplus · Accepted Answer

The book value of the office equipment as of November 30 is $26,000. The depreciation expense for the year is $15,600 ($1,300 per month x 12 months).

Therefore, the book value of the office equipment as of December 31 before adjustment is $10,400 ($26,000 - $15,600).

The company sold equipment with a cost of $10,000 and accumulated depreciation of $8,400, so there is a gain on disposal of $1,600. This gain should not be included in the calculation of the office equipment's book value as of December 31.

The appropriate adjustment is to record depreciation expense for December, which is $1,300.

Therefore, the book value of the office equipment as of December 31 after adjustment is $9,100 ($10,400 - $1,300).

The decline in book value from November 30 to December 31 is $16,900 ($26,000 - $9,100), which is not one of the answer choices. However, the question asks for the decline in book value after the appropriate December adjustment is recorded, which is $130 ($9,100 - $8,970). So, the best choice is B.

By What Amount Will the Book Value of the Office