Young Corporation bought a car with an estimated life of five years for $25,000. The residual value of the car is $5,000. After three years, the car was sold for $11,000. What was the difference between book value and selling price if Young used the straight-line method of depreciation?

Question

Quizplus · Accepted Answer

($25,000 - $5,000)/ 5 = $4,000; $4,000 × 3 = $12,000; $25,000 - $12,000 = $13,000 = Book Value; $13,000 - $11,000 (selling price)= $2,000.

Young Corporation Bought a Car with an Estimated Life of Five