Equipment cost $36,000 and is expected to be useful for 5 years and have no salvage value. Under the straight-line method, monthly depreciation will be:
A)$12.
B)$600.
C)$60.
D)$720.

Question

Quizplus · Accepted Answer

The straight-line depreciation method divides the cost of the equipment by its useful life to determine annual depreciation. For equipment costing $36,000 with a useful life of 5 years and no salvage value, annual depreciation is $36,000 / 5 = $7,200. Monthly depreciation is then $7,200 / 12 = $600.

Equipment Cost $36,000 and Is Expected to Be Useful for 5