Instructions

For this depreciation problem complete the spreadsheet calculating depreciation under the various methods for each asset. Once you have completed the spreadsheet then answer questions $3-4$ below. To receive all $25$ points for this assignment you must include both the spreadsheet and your answers to questions $3-4.$

Problem

Dorothy$$s Design is a relatively new landscaping business. Last year $(2022)$ has been very profitable, so Dorothy is planning to purchase a new tractor, implements, trailer and truck for her business. The details of her purchase are below.

Dorothy has asked you for your ideas about depreciation. She would like to know what her options are for depreciating these items. Dorothy also mentioned that although last year was very profitable, she is worried that the economy is heading into a recession and thinks that in the next few years she may have trouble turning a profit. Given this scenario she would like to know:

$1.$ What would the depreciation amounts be for each asset, for each year, using the various depreciation options for the next $5$ years? $($Complete the spreadsheet$)$

$2.$ What is the book value of each item at the end of the $5$ years using each option? $($Complete the spreadsheet$)$

$3.$ What are the advantages and disadvantages of each option?

$4.$ What is your recommendation and why?

Complete the template for your answers.

Asset Date of Purchase Cost Useful life Salvage Value

Tractor $3/31/202350,00010$ years $0$

Implements $4/2/202325,0004$ years $3,000$

Trailer $7/1/202330,00015$ years $0$

Truck$*7/1/202360,0005$ years $5,000$

$*$Dorothy estimates that the truck will be driven $100,000$ miles over the $5-$year life. For year $1$ the truck will be driven $7,000$ miles. Years $2-4$ the truck will be driven $20,000$ miles and year $5$ the truck will be d

riven $33,000$ miles.