On January 1, 2019, Johnson Consulting purchased a truck for $18,000. The truck is expected to last 60 months and have no salvage value. Calculate the book value of the truck on December 31, 2020.
A)$3,600
B)$14,400
C)$7,200
D)$10,800

Question

Quizplus · Accepted Answer

The truck's annual depreciation is calculated as the cost of the truck ($18,000) divided by its useful life (60 months), resulting in $300 per month. Over 24 months (January 1, 2019, to December 31, 2020), the total depreciation is $300 * 24 = $7,200. The book value on December 31, 2020, is the original cost ($18,000) minus the accumulated depreciation ($7,200), which equals $10,800.

On January 1, 2019, Johnson Consulting Purchased a Truck for $18,000