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​Ivorycoast, Inc. purchased a van on January​ 1, 2017, for $900,000. Estimated life of the van...

​Ivorycoast, Inc. purchased a van on January​ 1, 2017, for $900,000. Estimated life of the van was five​ years, and its estimated residual value was $94,000. Ivorycoast uses the straight−line method of depreciation. Calculate the book value of the van at the end of 2017.

a. $806,000

b. $738,800

c. $731,250

d. $843,750

Business   Accounting   
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Answer #1
Book value of the van at the end of 2017 = $ 738,800
Annual Depreciation = Purchase Cost - Residual Value
Useful life
Purchase Cost          900,000
Estimated Residual Value            94,000
Net Cost (900,000 - 94,000)          806,000
Estimated Useful life                       5
Annual Depreciation (806,000/5)          161,200
Book Value = Purchase Cost - Annual Depreciation = 900,000 - 161,200 = $738,800
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