Question

a company purchases a delivery van for $30,000. the van has a salvage value of $5,000 and a useful life of 5 years. using the straight - line depreciation method, what will be the book value of the van after 3 years? $24,000 $15,000 $18,000 $21,000

Explanation:

Step1: Calculate depreciable base

$\text{Depreciable Base} = \text{Cost} - \text{Salvage Value} = 30000 - 5000 = 25000$

Step2: Find annual depreciation

$\text{Annual Depreciation} = \frac{\text{Depreciable Base}}{\text{Useful Life}} = \frac{25000}{5} = 5000$

Step3: Compute total 3-year depreciation

$\text{Total Depreciation (3 years)} = 5000 \times 3 = 15000$

Step4: Calculate book value after 3 years

$\text{Book Value} = \text{Cost} - \text{Total Depreciation} = 30000 - 15000 = 15000$

Answer:

$15,000$