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The term depreciation refers to how the value of an asset (such as a car) decreases over time. There are several different approaches for calculating depreciation. Part A: In the straight-line method of calculating depreciation, the value of the item is reduced by the same amount each year. Suppose a company purchases a car for $24000. Using straight-line depreciation, the value of the car may be reduced by $2500 each year. Determine a formula for S(t), the value of the car t years after purchase. Answer: Part B: After five years, the value of the car, using the straight-line method, will be $ Part C: After twelve years, the value of the car, using the straight-line method, will be $ Part D: In the declining balance method of depreciation, the value of the item is reduced by the same percentage each year. Suppose the $24000 car is depreciated at a rate of 14% each year. Determine a formula for D(t), the value of the car t years after purchase. Answer: Part E: After five years, the value of the car, using the declining balance method, will be $ (Round to the nearest dollar) Part F: After twelve years, the value of the car, using the declining balance method, will be $ (Round to the nearest dollar) Part G: For tax purposes, the company may want to deduct the car's depreciation. However, only one method of depreciation can be used for a given asset. Which depreciation method should a company use for the $24000 car in order to maximize the deduction: the straight-line method or the declining balance method? Keep in mind that a company can increase their deduction for an asset if the asset has depreciated more in value. That is, a smaller value for the asset means a larger deduction for the company.

The term depreciation refers to how the value of an asset (such as a car) decreases over time. There are several different approaches for calculating depreciation. Part A: In the straight-line method of calculating depreciation, the value of the item is reduced by the same amount each year. Suppose a company purchases a car for $24000. Using straight-line depreciation, the value of the car may be reduced by $2500 each year. Determine a formula for S(t), the value of the car t years after purchase. Answer: Part B: After five years, the value of the car, using the straight-line method, will be $ Part C: After twelve years, the value of the car, using the straight-line method, will be $ Part D: In the declining balance method of depreciation, the value of the item is reduced by the same percentage each year. Suppose the $24000 car is depreciated at a rate of 14% each year. Determine a formula for D(t), the value of the car t years after purchase. Answer: Part E: After five years, the value of the car, using the declining balance method, will be $ (Round to the nearest dollar) Part F: After twelve years, the value of the car, using the declining balance method, will be $ (Round to the nearest dollar) Part G: For tax purposes, the company may want to deduct the car's depreciation. However, only one method of depreciation can be used for a given asset. Which depreciation method should a company use for the $24000 car in order to maximize the deduction: the straight-line method or the declining balance method? Keep in mind that a company can increase their deduction for an asset if the asset has depreciated more in value. That is, a smaller value for the asset means a larger deduction for the company.

Century 21 Accounting Multicolumn Journal
Century 21 Accounting Multicolumn Journal
11th Edition
ISBN:9781337679503
Author:Gilbertson
Publisher:Gilbertson
Chapter19: Accounting For Plant Assets, Depreciation, And Intangible Assets
Section: Chapter Questions
Problem 1CP
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The term depreciation refers to how the value of an asset (such as a car) decreases over time. There are several different approaches for calculating depreciation. Part A: In the straight-line method of calculating depreciation, the value of the item is reduced by the same amount each year. Suppose a company purchases a car for $24000. Using straight-line depreciation, the value of the car may be reduced by $2500 each year. Determine a formula for S(t), the value of the car t years after purchase. Answer: Part B: After five years, the value of the car, using the straight-line method, will be $ Part C: After twelve years, the value of the car, using the straight-line method, will be Part D: In the declining balance method of depreciation, the value of the item is reduced by the same percentage each year. Suppose the $24000 car is depreciated at a rate of 14% each year. Determine a formula for D(t), the value of the car t years after purchase. Answer: Part E: After five years, the value of the car, using the declining balance method, will be $ (Round to the nearest dollar) Part F: After twelve years, the value of the car, using the declining balance method, will be $ (Round to the nearest dollar) Part G: For tax purposes, the company may want to deduct the car's depreciation. However, only one method of depreciation can be used for a given asset. Which depreciation method should a company use for the $24000 car in order to maximize the deduction: the straight-line method or the declining balance method? Keep in mind that a company can increase their deduction for an asset if the asset has depreciated more in value. That is, a smaller value for the asset means a larger deduction for the company.
Transcribed Image Text:The term depreciation refers to how the value of an asset (such as a car) decreases over time. There are several different approaches for calculating depreciation. Part A: In the straight-line method of calculating depreciation, the value of the item is reduced by the same amount each year. Suppose a company purchases a car for $24000. Using straight-line depreciation, the value of the car may be reduced by $2500 each year. Determine a formula for S(t), the value of the car t years after purchase. Answer: Part B: After five years, the value of the car, using the straight-line method, will be $ Part C: After twelve years, the value of the car, using the straight-line method, will be Part D: In the declining balance method of depreciation, the value of the item is reduced by the same percentage each year. Suppose the $24000 car is depreciated at a rate of 14% each year. Determine a formula for D(t), the value of the car t years after purchase. Answer: Part E: After five years, the value of the car, using the declining balance method, will be $ (Round to the nearest dollar) Part F: After twelve years, the value of the car, using the declining balance method, will be $ (Round to the nearest dollar) Part G: For tax purposes, the company may want to deduct the car's depreciation. However, only one method of depreciation can be used for a given asset. Which depreciation method should a company use for the $24000 car in order to maximize the deduction: the straight-line method or the declining balance method? Keep in mind that a company can increase their deduction for an asset if the asset has depreciated more in value. That is, a smaller value for the asset means a larger deduction for the company.
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