Brazil Group purchases a vehicle at a cost of $50,000 on January 2, 2014. Individual components of the vehicle and useful lives are as follows.\nCost U
Brazil Group purchases a vehicle at a cost of $50,000 on January 2, 2014. Individual components of the vehicle and useful lives are as follows.
\r\nCost Useful Lives
\r\nTires $ 6,000 2 years
\r\nTransmission 10,000 5 years
\r\nTrucks 34,000 10 years
\r\nInstructions
\r\n(Assume no residual (salvage) value.)
\r\n(a) Compute depreciation expense for 2014, assuming Brazil depreciates the vehicle as a single unit.
\r\n(b) Compute depreciation expense for 2014, assuming Brazil uses component depreciation.
\r\n(c) Why might a company want to use component depreciation to depreciate its assets?
\r\n