If a vehicle is purchased for $40,000 and has an accumulated depreciation of $30,000, what is its book value?

The book value of an asset is determined by subtracting its accumulated depreciation from its original purchase price. In this scenario, the vehicle was purchased for $40,000 and has accumulated depreciation of $30,000.

To find the book value, we perform the following calculation:

Book value = Purchase price - Accumulated depreciation
Book value = $40,000 - $30,000
Book value = $10,000

This calculation clearly indicates that the correct book value of the vehicle is $10,000. Understanding the concept of book value is crucial, as it reflects the net value of the asset on the financial statements, indicating how much of the original purchase price remains after accounting for wear and tear or obsolescence through depreciation over time. This understanding is essential for sound financial management in residential care and assisted living facilities, as it helps with asset management and financial reporting.