Question

​Gulfcoast, Inc. purchased a van on January​ 1, 2019, for​ $930,000. Estimated life of the van was five​ years, and its estimated residual value was​ $93,000. Gulfcoast uses the​ straight-line method of depreciation. Calculate the book value of the van at the end of 2019.

Answer 1

$762,600

Step-by-step explanation:

The book value of an asset is the difference between the historical cost of the asset and the accumulated depreciation on the asset. The accumulated depreciation is the sum of the depreciation over the number of years the asset has been used.

Depreciation = (cost - salvage value)/estimated useful life

= ($930,000 - $93,000)/5

= $167,400

At the end of 2019,

Book value of van = $930,000 - $167,400

= $762,600