On January 1, 2012, Lasche Auto Sales and Service purchased a vehicle for use in the business at a cost of $22,000.The vehicle has a 4-year useful life with an expected residual value of $2,000.The company has a December 31 year-end and uses straight-line depreciation for all capital assets.What is the vehicle's net book value on December 31, 2014?

Question

Quizplus · Accepted Answer

The annual depreciation expense is ($22,000 - $2,000) / 4 = $5,000. After 3 years (2012, 2013, 2014), total depreciation is $15,000. The net book value is $22,000 - $15,000 = $7,000.

On January 1, 2012, Lasche Auto Sales and Service Purchased