Question

On January 1, Miami Gold Exchange paid cash of $64,800 for computers that are expected to remain useful for six years. At the end of six years, the value of the computers is expected to be zero.

Calculate the amount of depreciation for the month of January using the straight-line depreciation method.

Answer 1

The monthly depreciation for January using the straight-line method for the Miami Gold Exchange's computers is $900.

Step-by-step explanation:

The straight-line depreciation method is a common way of allocating the cost of an asset evenly over its useful life.

For the Miami Gold Exchange's computers worth $64,800 with no salvage value and a useful life of six years, the annual depreciation expense can be calculated by dividing the initial cost by the useful life.

The monthly depreciation expense is then found by dividing the annual depreciation by 12 months.

To calculate: $64,800 initial cost / 6 years = $10,800 annual depreciation. For January, the monthly depreciation would be $10,800 / 12 months = $900.