A truck cost $21,000.00 with an estimated salvage value of $1,000.00. It has an estimated useful life of 5 years. If the truck was purchased on January 5, what would be the book value of the truck at the end of year 1, using the straight-line method?

$17,000.00

$16,000.00

$20,000.00

$4,000.00

Straight line depreciation applies the same amount of depreciation in each year.

Our Depreciation Base is 21,000 - 1,000 = 20,000

The useful life is 5 years, so each year we depreciate 20,000 : 5 = 4,000

Book Value is Cost - Accumulated Depreciation

After Year 1:

Book Value = 21,000 - 4,000 = 17,000

Answer is A) 17,000