Question

On January 1, 2022, Skysong, Inc. purchased equipment for $44280. The company is depreciating the equipment at the rate of $620 per month. The book value of the equipment at December 31, 2022 is: $44280. $0. $7440. $36840.

Answer 1

On December 31, 2022, the book value of the equipment comes out to be $36,840 with monthly depreciation of $620.

Option D is the correct answer.

What is meant by depreciation?

Depreciation is a method that applies to tangible fixed assets where the fall in the value of an asset has been recorded.

Given values:

The purchase cost of equipment: $44,280

Monthly depreciation: $620

Step-1 Computation of annual depreciation charges:

$\rm\ Annual \rm\ depreciation=\rm\ Monthly \rm\ depreciation \times \rm\ Number \rm\ of \rm\ months \rm\ in \rm\ a \rm\ year\\\rm\ Annual \rm\ depreciation=\ 620 \times\ 12\\\rm\ Annual \rm\ depreciation=\ 7,440$

Step-2 Computation of book value of the equipment at the year-end:

$\rm\ Equipment's \rm\ Book \rm\ value=\rm\ Purchase \rm\ Cost \rm\ of \rm\ Equipment-\rm\ Annual \rm\ Depreciation \\\rm\ Equipment's \rm\ Book \rm\ value=\ 44,280-\ 7,440\\\rm\ Equipment's \rm\ Book \rm\ value=\ 36,840$

Therefore, when the company purchases equipment at $44,280 with annual depreciation is $7,440, then the equipment's book value comes out to be $36,840 at the year-end.

Learn more about the depreciation in the related link:

brainly.com/question/14682335

#SPJ1