If a fixed asset,such as a computer,were purchased on January 1 for $3,750 with an estimated life of three years and a salvage or residual value of $150,the journal entry for monthly expense under straight-line depreciation is
A)Depreciation Expense 100Accumulated Depreciation 100
B)Depreciation Expense 1,200Accumulated Depreciation 1,200
C)Accumulated Depreciation 1,200Depreciation Expense 1,200
D)Accumulated Depreciation 100Depreciation Expense 100

Question

Quizplus · Accepted Answer

The straight-line depreciation method spreads the cost of the fixed asset evenly over its useful life. The calculation is: (Cost - Salvage Value) / Useful Life. Here, ($3,750 - $150) / 3 years = $1,200 per year, or $100 per month. Therefore, the monthly journal entry is a debit to Depreciation Expense and a credit to Accumulated Depreciation for $100.

If a Fixed Asset,such as a Computer,were Purchased on January