A company purchased new furniture at a cost of $16,000 on January 1. The furniture is estimated to have a useful life of 6 years and a $1,000 salvage value. The company uses the straight-line method of depreciation.
-What is the book value of the furniture on December 31 of the first year?
A) $13,333
B) $16,000
C) $13,500
D) $15,000
E) $2,500

Question

A company purchased new furniture at a cost of $16,000 on January 1. The furniture is estimated to have a useful life of 6 years and a $1,000 salvage value. The company uses the straight-line method of depreciation. 
-What is the book value of the furniture on December 31 of the first year?
A) $13,333
B) $16,000
C) $13,500
D) $15,000
E) $2,500

Quizplus · Accepted Answer

The annual depreciation expense is ($16,000 - $1,000) / 6 = $2,500. The book value at the end of the first year is $16,000 - $2,500 = $13,500.

A Company Purchased New Furniture at a Cost of $16,000