A company purchased new furniture at a cost of $16,000 on January 1.The furniture is estimated to have a useful life of 6 years and a $1,000 salvage value.The company uses the straight-line method of depreciation.What is the book value of the furniture on December 31 of the first year?
A)$16,000
B)$15,000
C)$2,500
D)$13,500
E)$13,333

Question

Quizplus · Accepted Answer

Straight-line depreciation method means that the depreciation expense for each year will be the same. 
Depreciation expense = (Cost - Salvage value) / Useful life = ($16,000 - $1,000) / 6 = $2,500 per year.

The book value at the end of the first year would be: 
Book value = Cost - Depreciation expense for one year = $16,000 - $2,500 = $13,500.

Therefore, the best choice is D.

A Company Purchased New Furniture at a Cost of $16,000