Use the information below to answer the following questions.
Norman Ltd purchased a motor vehicle for $45,000 on 1 July 2009. The vehicle was expected to have a 4-year life and a $13,000 trade-in value, and was expected to be driven for 160,000 km. The financial period ends on 30 June.
-Assuming Norman Ltd used the straight-line method of depreciation,the net book value at 30 June 2012 was:
A) $8000
B) $11 250
C) $21 000
D) $29 000.

Question

Quizplus · Accepted Answer

Straight-line method of depreciation = (Cost - Residual value) / Useful life

Cost = $45,000
Residual value = $13,000
Useful life = 4 years

Annual depreciation = (45,000 - 13,000) / 4 = $8,000

Accumulated depreciation after 3 years (June 2009 - June 2012) = 8,000 * 3 = $24,000

Net book value = Cost - Accumulated depreciation
= 45,000 - 24,000
= $21,000

Use the Information Below to Answer the Following Questions