Iverycoast Inc. purchased a van on January 1, 2015, for $800,000. Estimated life of the van was 5 years, and its estimated residual value was $90,000. Iverycoast uses the straight-line method of depreciation. Calculate the book value of the van at the end of 2015.

Question

Quizplus · Accepted Answer

Annual depreciation = (Cost - Residual value) / Estimated life
= ($800,000 - $90,000) / 5 = $142,000
Book value at the end of 2015 = Cost - Depreciation for 2015
= $800,000 - $142,000 = $658,000. 
Therefore, the answer is D, $658,000.