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) $14,000.
C) $12,000.
D) $11,670.

Question

Quizplus · Accepted Answer

The straight-line depreciation expense per year is calculated as (Cost - Salvage Value) / Useful Life. Therefore, ($16,500 - $1,500) / 6 = $2,500 per year. The book value at the end of Year 1 is Cost - Accumulated Depreciation = $16,500 - $2,500 = $14,000.

Zinc Corp Purchases a Truck at the Beginning of Year 1