hudson landscaping service bought equipment for $9,000 on january 1 of the current year. it has an estimated…

hudson landscaping service bought equipment for $9,000 on january 1 of the current year. it has an estimated useful life of five years and zero residual value. hudson uses the straight - line method to calculate depreciation and records depreciation expense in the books at the end of every month. as of june 30 of the current year, the book value of this equipment shown on its balance sheet will be \n\na. $9,000\nb. $8,100\nc. $9,000\nd. $9,150

hudson landscaping service bought equipment for $9,000 on january 1 of the current year. it has an estimated useful life of five years and zero residual value. hudson uses the straight - line method to calculate depreciation and records depreciation expense in the books at the end of every month. as of june 30 of the current year, the book value of this equipment shown on its balance sheet will be \n\na. $9,000\nb. $8,100\nc. $9,000\nd. $9,150

Answer

Explanation:

Step1: Calculate annual depreciation

Annual depreciation = $\frac{Cost - Residual\ value}{Useful\ life}$. Given cost = $9,000$, residual value = $0$, and useful life = 5 years. So, annual depreciation = $\frac{9000 - 0}{5}=1800$.

Step2: Calculate monthly depreciation

Monthly depreciation = $\frac{Annual\ depreciation}{12}$. So, monthly depreciation = $\frac{1800}{12}=150$.

Step3: Calculate accumulated depreciation from January 1 - June 30

Number of months from January 1 - June 30 is 6 months. Accumulated depreciation = Monthly depreciation $\times$ Number of months = $150\times6 = 900$.

Step4: Calculate book - value

Book - value = Cost - Accumulated depreciation. So, book - value = $9000-900 = 8100$.

Answer:

B. $8,100$