On January 1, 2000, Luke bought a RAV4 worth P900,000 and intend to sell it for P300,000
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Question:
On January 1, 2000, Luke bought a RAV4 worth P900,000 and intend to sell it for P300,000 after its 10 year life.
a) What amount had accumulated in the depreciation reserve at the end of 2003 if the declining balance method was used?
(b) using sum-of-the years digit method, determine depreciation charge for year 2004 and the bookvalue at the of 2004.
(c) If, on June 30, 2003, he decided to sell the old car at bookvalue and buy a new car for P1,000,000, how much more money should Luke borrow to buy the new car if he used the straight line method in computing the depreciation every 6 months and made it a point to deposit the said amount in a bank that offers 10 percent compounded semiannually?
Expert Answer:
1 Accumulated in the depreciation reserve at the end of 2003 Decline balance method or Reducing bala... View the full answer
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