The XYZ Block Company purchased a new office computer and other depreciable computer hardware for $12,000. During
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Question:
The XYZ Block Company purchased a new office computer and
other depreciable computer hardware for $12,000. During the third
year, the computer is declared obsolete and is donated to the local
community college. Using an interest rate of 10%, calculate the PW
of the depreciation deductions. Assume that no salvage value was
initially declared and that the machine was expected to last 5 years.
(a) Straight-line depreciation
(b) Double declining balance depreciation
(c) 100% bonus depreciation
(d) MACRS depreciation
(e) Which method is preferred for determining the firm's taxes?
(f) Which method is preferred for determining the firm's value?
(g) Is using two accounting methods ethical?
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