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.
Simatupang AACE 2014 