Brazil Group purchases a tractor at a cost of €50,000 on January 2, 2015. Individual components of the tractor and useful lives are as follows (zero residual value).

Instructions

(a) Compute depreciation expense for 2015, assuming Brazil depreciates the tractor as a single unit.

(b) Compute depreciation expense for 2015, assuming Brazil uses component depreciation.

(c) Why might a company want to use component depreciation to depreciate its assets?

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Cost Useful Lives Tires 6,000 Transmission Tractor 10,000 34,000 2 years 5 years 10 years