John Morse Corporation buys a van for $16,000. The estimated life of the van is four years. The residual value of the van is $4,000. After two years, the van is sold for $8,000. What was the difference between the book value and the amount received from selling the van if John used the straight-line method of depreciation?

Question

Quizplus · Accepted Answer

$16,000 - $4,000 = $12,000; $12,000 × .25 = $3,000; $3,000 × 2 years = $6,000;
$16,000 - $6,000 = $10,000; $10,000 - $8,000 = $2,000.

John Morse Corporation Buys a Van for $16,000