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

Question

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.

a) Use straight-line depreciation.

b) Use declining balance depreciation using a rate that ensures the book value equals the salvage value.

c) Use double declining balance depreciation.

d) Use double declining balance switching to straight line depreciation.

Explanation / Answer

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

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