A tractor for over-the-road hauling is purchased for $75,000.00. It is expected to be of use to the company for 6 years, after which it will be salvaged for $3,200.00. Calculate the depreciation deduction and the unrecovered investment during each year of the tractors life.
A tractor for over-the-road hauling is purchased for $75,000.00. It is expected to be of use to the company for 6 years, after which it will be salvaged for $3,200.00. Calculate the depreciation deduction and the unrecovered investment during each year of the tractors life.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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ASAP PLS ASAP PLSSS
Transcribed Image Text:A tractor for over-the-road hauling is purchased for $75,000.00. It is expected to be of use to the company for 6 years, after which it
will be salvaged for $3,200.00. 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 = $
Do all computations to 5 decimal places and round final answers to 2 decimal places. Tolerance is ± 50.
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