Brazil Group purchases a tractor at a cost of €50,000 on January 2, 2022. Individual components of the tractor and useful lives areas follows (zero residual value).

Instructions

a. Compute depreciation expense for 2022, assuming Brazil Group depreciates the tractor as a single unit.

b. Compute depreciation expense for 2022, assuming Brazil Group uses component depreciation.

c. Why might a company want to use component depreciation to depreciate its assets?

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Cost Useful Lives € 6,000 Transmission 10,000 Tires 2 years 5 years Tractor 34,000 10 years