Question
A tractor for over-the-road hauling is purchased for $105,000.00. It is expected to be of use to the company for 6 years, after which it
A tractor for over-the-road hauling is purchased for $105,000.00. It is expected to be of use to the company for 6 years, after which it will be salvaged for $4,200.00. Calculate the depreciation deduction and the unrecovered investment during each year of the tractors life. a. Use straight-line depreciation. Provide depreciation and book value for year 6. Depreciation for year 6 = $__ book value for year 6 = $___
b. Use declining-balance depreciation, with a rate that ensures the book value equals the salvage value. Provide depreciation and book value for year 6. Depreciation for year 6 = $____ book value for year 6 = $____
c. Use double declining balance depreciation. Provide depreciation and book value for year 6. Depreciation for year 6 = $____ book value for year 6 = $____
d. Use double declining balance, switching to straight-line depreciation. Provide depreciation and book value for year 6. Depreciation for year 6 = $______ book value for year 6 = $______
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