Example $2($Home Work$)$

Kimberley Farming Company $($KFC$)$ had a tractor acquired in January $2012$ for R$150,000.$ The estimated disposal value $($residual value$)$ of the tractor was R$15,000$ after a total useful life of $5$ years. The financial year of NFC ends on December $31.$

Answer the following questions based on the above information.

Assuming other things being the same, which method of depreciation Would show a higher net profit in December $31,2015?$

a$)$ Straight $-$ line method

b$)$ Reducing balance method

c$)$ It is difficult to determine

d$)$ The net profit would be the same for both