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W4_HPO_Choosing The Best Depreciation Method

1. Problem Statement

My friend ask my help to choose the best depreciation method he should apply in his accounting book. He has bought some Kijang Innova cars cost around US$ 25,000 each intended for rentals. Because the rentals is intended for offices, he is ready for 3-years fixed rate with a risk of increasing operation and maintenance cost around 10% inflation each year. He also said that the cars will be rejuvenated for every 5 years and sold at least next year after the commissioning. Because the cars are Toyota’s, the salvage value is predicted to stay around 60% after 5 years conservatively. Tax will be assumed at 30%  averagely.

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Filed under Hadianto P, Week 04