QUESTION 9 On August 1, Warren Company placed into service equipment with a capitalized cost of...
QUESTION 9
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On August 1, Warren Company placed into service equipment with a capitalized cost of $40,809. The equipment was paid for by issuing a 90 day 6% Note Payable. Based on industry standards, the equipment is expected to have a useful life of 7 years, at which time it will have an estimated worth of $3,921. The equipment will be depreciated using the Straight Line method.
Based on these transactions alone, what is the Depreciation Expense on the equipment on August 31?
Homework Answers
Depreciation Expense on the equipment on August 31 = $ 439.14
Calculation:
Depreciation Expense = [ Equipment Cost - Residual Value ] / Useful Life * 1 Month / 12 Months
Depreciation Expense = [ $ 40,809 - $ 3,921 ] / 7 Years * 1 Month / 12 Months = $ 439.14
Notes:
1) Note payable is not considered in calculation.
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