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$450

Explanation:

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 $12000$3000=$9000

Reduction in worth per month ->($9000)/(5xx12) =$150$90005×12=$150

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

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

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