Calculate the sinking fund depreciation allowance for a company-owned executive car having a cost basis of $60,000.

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Calculate the sinking fund depreciation allowance for a company-owned executive car having a cost basis of $60,000. The company will keep it for 3 years, and it can be sold at $25.000 at that time. Interest is 10 percent.

a. Determine the sinking fund depreciation for each of the 3 years.

b. Why is this depreciation method considered to be back-end loaded?

c. Why is sinking fund out of favor as a depreciation strategy?

Related Book For answer-question

Cost Management Measuring Monitoring and Motivating Performance

ISBN: 978-0470769423

2nd edition

Authors: Leslie G. Eldenburg, Susan K. Wolcott

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Posted Date: Dec 17, 2018 12:58 AM

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Calculate the sinking fund depreciation allowance for a company-owned executive car having a cost basis of $60,000.

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Under Sinking fund method of depreciating an asset definite amount of money is set aside for investi... View the full answer

Cost Management Measuring Monitoring and Motivating Performance

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