Quantum Electronic Services paid P = $40,000 for its networked computer system. Both tax and book depreciation

Question:

Quantum Electronic Services paid P = $40,000 for its networked computer system. Both tax and book depreciation accounts are maintained. The annual tax recovery rate is based on the previous year€™s book value (BV), while the book depreciation rate is based on the original first cost (P). Use the rates listed below to calculate

(a) Annual depreciation,

(b) Book values for each method.

Year of Ownershlp Tax rate, % of BV Book rate, % of P 3 4 40 40 40 25 25 40 25 25 2.