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

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Finance

A tractor for over-the-road hauling is purchased for $90,000. Itis expected to be of use to the company for 6 years, after which itwill be salvaged for $4,000. Calculate the depreciation deductionand the unrecovered investment during each year of the tractor'slife. Use double declining balance switching to straightline depreciation. Please show excel equations if excel isused!

Answer & Explanation Solved by verified expert
4.0 Ratings (717 Votes)

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

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A tractor for over-the-road hauling is purchased for $90,000. Itis expected to be of use to the company for 6 years, after which itwill be salvaged for $4,000. Calculate the depreciation deductionand the unrecovered investment during each year of the tractor'slife. Use double declining balance switching to straightline depreciation. Please show excel equations if excel isused!

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