On January 1, 2011, Chicago Furniture purchased a new delivery truck.The company paid $65,000 for the truck, $12,000 for an annual insurance policy and $1,300 for a motor vehicle license.The truck has an estimated residual value of $5,000 at the end of its useful life and Chicago Furniture uses the double-declining-balance method for other similar assets.At what net amount will Chicago Furniture record the truck on its statement of financial position at December 31, 2011?

Question

Quizplus · Accepted Answer

The correct answer is B because the net amount of the truck on the statement of financial position at December 31, 2011 is $32,500. The truck was purchased on January 1, 2011 for $65,000. The annual insurance policy was $12,000 and the motor vehicle license was $1,300. The truck has an estimated residual value of $5,000 at the end of its useful life. Chicago Furniture uses the double-declining-balance method for other similar assets. The depreciation expense for the year is $20,000. The net amount of the truck on the statement of financial position at December 31, 2011 is $32,500.

On January 1, 2011, Chicago Furniture Purchased a New Delivery