On 1 January 2018, a new motor vehicle with a useful life of four years and an estimated trade-in value of $12 000 was purchased by a business for $54 000. The straight-line method is employed and the financial year ends on 31 December. What was the accumulated depreciation at 31 December 2020?
A) $21 000
B) $31 500
C) $42 000
D) None of the above

Question

Quizplus · Accepted Answer

The annual depreciation expense can be calculated as (54,000 - 12,000) / 4 = $10,500.

Since the financial year ends on 31 December and the motor vehicle was purchased on 1 January 2018, the vehicle would have been depreciated for three full years at the end of 2020.

Therefore, accumulated depreciation would be 3 x $10,500 = $31,500.

Option B is the closest answer.

On 1 January 2018, a New Motor Vehicle with a Useful