Fabian Woodworks This company purchased a truck at a cost of $12,000.The truck has an estimated residual value of $2,000 and an estimated life of 5 years,or 100,000 hours of operation.The truck was purchased on January 1,2012,and was used 27,000 hours in 2012 and 26,000 hours in 2013.
-Refer to Fabian Woodworks.If the company uses the straight-line method of depreciation,what is the book value at December 31,2014?

Question

Quizplus · Accepted Answer

The straight-line depreciation method calculates annual depreciation by subtracting the residual value from the cost and dividing by the useful life. Annual depreciation = ($12,000 - $2,000) / 5 = $2,000. After 3 years (2012, 2013, 2014), total depreciation is $6,000. Book value at December 31, 2014 = $12,000 - $6,000 = $6,000.

Fabian Woodworks This Company Purchased a Truck at a Cost