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A car is purchased for $35,000. It will be retained for 5 years and minimal salvage value is considered for depreciation analysis at the end
A car is purchased for $35,000. It will be retained for 5 years and minimal salvage value is considered for depreciation analysis at the end of the fifth year. a) Calculate the depreciation value and the book value of this car over 5 years using the double depreciation method (DDB) and a salvage value of zero. b) The car is expected to be driven up to 100,000 miles (which is 100,000 units of production) before its value becomes zero. If the depreciation is proportional to the miles driven (units of production), calculate the depreciation in dollars based on the unit of production. The car is expected to be driven as follows: year 1: 15,000 miles, year 2: 22,000 miles, year 3: 16,000 miles, year 4: 18,000 miles, and year 5: 25,000 miles. At the end of year 5, in this case, the car would have very little but not exactly zero value. c) If the unit of production can be used for tax purposes, would you propose to use the units of production method in this case
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