If a vehicle was purchased for $6,500 and has a residual value of $500, the annual amortization expense will be $1,000 if the estimated useful life is:
A)6 years
B)6.5 years
C)7 years
D)13 years

Question

Quizplus · Accepted Answer

The annual amortization expense is calculated by subtracting the residual value from the purchase price and then dividing by the useful life. ($6,500 - $500) / 6 = $1,000.

If a Vehicle Was Purchased for $6,500 and Has a Residual