Mr. Jhonny bought a car worth P900,000 last January 1, 2000, 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 the depreciation charge for 2004 and the book value at the of 2004. (c) If, on June 30, 2003, he decided to sell the old car at book value and buy a new car for P1,000,000, how much more money should Jhonny 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 a 10 percent compounded semiannually?
Mr. Jhonny bought a car worth P900,000 last January 1, 2000, 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 the depreciation charge for 2004 and the book value at the of 2004. (c) If, on June 30, 2003, he decided to sell the old car at book value and buy a new car for P1,000,000, how much more money should Jhonny 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 a 10 percent compounded semiannually?
Chapter8: Depreciation, Cost Recovery, Amortization, And Depletion
Section: Chapter Questions
Problem 47P
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Question
Mr. Jhonny bought a car worth P900,000 last January 1, 2000, and intend to sell it for P300,000
after its 10-year life.
a) What amount had accumulated in the
declining-balance method was used?
(b) Using sum-of-the years digit method, determine the depreciation charge for 2004 and the
book value at the of 2004.
(c) If, on June 30, 2003, he decided to sell the old car at book value and buy a new car
for P1,000,000, how much more money should Jhonny 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 a 10 percent compounded
semiannually?
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