A tractor for over-the-road hauling is purchased for $90,000. It is expected to be of use...

A tractor for over-the-road hauling is purchased for $90,000. It is expected to be of use to the company for 6 years, after which it will be salvaged for $4,000. Calculate the depreciation deduction and the unrecovered investment during each year of the tractor's life. Use double declining balance switching to straight line depreciation. Please show excel equations if excel is used!

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Expert Solution

Double declining depreciation rate = 2 /useful life

= 2/6

= .3333333 or 33.33333%

	Depreciation expense			End of year values
	Carrying value	Rate	Depreciation expense	Accumulated depreciation	Carrying value
1	90000	33.33333%	30000	30000	90000-30000=60000
2	60000	33.33333%`	20000	30000+20000=50000	60000-20000=40000
3	40000	33.333333%	13333	50000+13333= 63333	40000-13333= 26667
4	26667	33.333333%`	8889	63333+8889 = 72222	26667-8889= 17778
5	17778	33.333333%	5926	72222+5926= 78148	17778-5926=11852
6	11852	33.33333%	3951	78148+3951= 82099	7901

jeff jeffy answered 1 year ago

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