Homework SourseA truck costs 16000 with a residual value of 1000 It has an
A truck costs $16,000 with a residual value of $1,000. It has an estimated useful life of five years. If the truck was bought on July 3, what would be the book value at the end of year 1 using straight-line rate?
A truck costs $16,000 with a residual value of $1,000. It has an estimated useful life of five years. If the truck was bought on July 3, what would be the book value at the end of year 1 using straight-line rate?
Solution
Depreciation for the period July-December=(Cost-Residual value)/Useful life*(6/12)
=(16000-1000)/5*(6/12)
=$1500
Hence book value at the end of year 1 using straight-line rate=(16000-1500)
=$14500.
