Response:
Depreciation as of December 31, Year 1 will amount to $1,250
Detailed explanation:
Cost of Purchase = $28,000
Salvage Value = $3,000
Total Depreciation:
The total depreciation over 5 years (60 months) is calculated as Purchasing Cost minus Salvage Value
Total Depreciation over 5 years (60 months) = 28,000 - 3,000
Total Depreciation over 5 years (60 months) equals $25,000
Calculating Monthly Depreciation:
Monthly depreciation is derived from the overall depreciation divided by the total number of months as follows:
Total Depreciation for a single month = 25,000/60
Depreciation per month = 416.67$ (Monthly Depreciation)
Depreciation until December 31, Year 1
As this spans from September 1 to December 31 of Year 1, three months have passed, yielding total depreciation = 3 * Monthly Depreciation
Thus, Depreciation as of December 31, Year 1 = 3 * 416.67
Total Depreciation by December 31, Year 1 = $1,250
