Question

Centrum Services purchased $4,400 worth of equipment. The equipment has an estimated useful life of seven years and a salvage value of $200. Using the straight-line method, the depreciation for the first month is:

Answer 1

Using the straight-line method, the depreciation for the first month is: $50

Using this formula

Depreciation=(Cost -Salvage value) /Useful life

Where:

Cost=$4,400

Salvage value=$200

Useful life=7 years

Let plug in the formula

Depreciation=[($4,400-$200)/7]×1/12

Depreciation=($4,200/7)×1/12

Depreciation=$600×1/12

Depreciation=$50

Inconclusion Using the straight-line method, the depreciation for the first month is: $50

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