Equipment was originally worth for $12000 The equipment is expected to last 5 more years and have a salvage value of $3000 what is the deprecation expense after 3 months?

1 Answer
Jul 22, 2017

The method of depreciation calculation is not defined in the question.

Assuming a linear reduction in worth #->$450#


Normally depreciation is a compound type calculation and initially I started to answer using this scenario.

After reading the question again I decided that the original intention of the question poser was not this at all.

Assumption: The depreciation rate is constant per month

Total reduction in worth over 5 years #->$12000-$3000=$9000 #

Reduction in worth per month #->($9000)/(5xx12) =$150#

So for 3 months we have a reduction in value of:

#$12000-(3xx$150) = $12000-$450#

The value of $450 is what the question is asking for.