Question

Maxwell Tax Planning Service bought communications equipment for $ 10 comma 800 on January? 1, 2019. The equipment has an estimated useful life of five years and zero residual value. Maxwell uses the straightminusline method to calculate depreciation and records depreciation expense in the books at the end of each month. As of June? 30, 2019, the balance in the Accumulated Depreciation account for this equipment is? ________.

Answer 1

Accumulated depreciation will be $1080 for 6 months.

Step by step explanation

Maxwell Tax Planning Service with a communication equipment has value on 1 Jan 2019 of $10,800 and has a useful life of 5 years.

We will depreciate 10,800/5 and will get depreciation charge for 1 year which is $2160.

10,800/5 = 2160

Hence, depreciation for 1 year is $2160

Obtained from the question is that we need depreciation till 30 June 2019.

Thereby, we will prorate 1 year depreciation $2160 by multiplying it with 6 months and dividing with 12 months. We will get the answer $1080.

2160 x 6 / 12 = 1080

Therefore, 6 months depreciation will be $1080