Question

Zinc Corp. purchases a truck at the beginning of Year 1 at a cost of $16,500. The truck is estimated to have a useful life of 6 years and a trade-in value of $1,500. Assuming that Zinc Corp. uses the straight-line method of depreciation, the book value of the truck at the end of Year 1 is: a.$13,580. b.$12,000. c.$11,670. d.$14,000.

Answer 1

d. 14,000

Step-by-step explanation:

Straight line method formula: (cost - tradein value) / useful life = (16,500 - 1,500) / 6 = 2,500. So deprecciation per annum is 2,500 dollar and at the end of Year 1 our truck's value is depreciated 2,500 dollar. There remains useful life which is 15,000-2,500=12,500 and plus trade-in value which is 1,500. Therefore; 12,500+1,500=14,000