Julie bought a boat at the beginning of the year for $35,000. The boat has an estimated life of 8 years and a salvage value of $14,000 at the end of the 8-year period. What is the book value after the first year?
A) $32,375
B) $29,750
C) $21,000
D) $2,625

Question

Quizplus · Accepted Answer

The straight-line depreciation method is used here. The annual depreciation is calculated as (Cost - Salvage Value) / Useful Life = ($35,000 - $14,000) / 8 = $2,625. The book value after the first year is the initial cost minus the first year's depreciation: $35,000 - $2,625 = $32,375.

Julie Bought a Boat at the Beginning of the Year