On 1 January 2015,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 net book value at 31 December 2017?
A) $12 500
B) $22 500
C) $42 000
D) $43 500

Question

Quizplus · Accepted Answer

The net book value at 31 December 2017 can be calculated by subtracting the accumulated depreciation from the cost of the vehicle. The cost of the vehicle is $54,000, and its estimated trade-in value at the end of its useful life (4 years) is $12,000. This means the total depreciation over its useful life is $54,000 - $12,000 = $42,000. Using the straight-line method, the annual depreciation is $42,000 / 4 = $10,500. After 3 years (by 31 December 2017), the accumulated depreciation is $10,500 * 3 = $31,500. Therefore, the net book value at 31 December 2017 is $54,000 - $31,500 = $22,500.

On 1 January 2015,a New Motor Vehicle with a Useful