On Jan.1,2016 Johnson Consulting purchased a truck for $12,000.The truck was expected to last 60 months and have no salvage value.Calculate the book value of the truck after two years?

Question

Quizplus · Accepted Answer

To calculate the book value of the truck after two years, we need to determine the depreciation expense for the first two years.

First, we need to determine the annual depreciation expense:

Cost of truck / Useful life in years = Annual Depreciation Expense

$12,000 / 60 = $200 per year

Next, we can calculate the depreciation expense for the first two years:

$200 per year x 2 years = $400

To find the book value of the truck after two years, we need to subtract the accumulated depreciation from the cost of the truck:

Cost of truck - Accumulated depreciation = Book value

$12,000 - $400 = $11,600

Therefore, the correct answer is B) $7,200.

On Jan1,2016 Johnson Consulting Purchased a Truck for $12,000