When would a business owner have the incentive to raise prices?
1 answer:
You might be interested in
Answer:
option (A) $29,920
Explanation:
Data provided in the question;
Purchasing cost = $40,000
Estimated life = 6 years
Salvage value = $4,000
Estimated driving life = 100,000
Vehicle driven in total till 2020 = 10,000 + 18,000 = 28,000
Now,
Using the units-of-production depreciation method
Total depreciation till 2020 =
or
Total depreciation till 2020 =
or
Total depreciation till 2020 = $10,080
Thus,
Book value on December 31, 2020 = Purchasing cost - Depreciation
= $40,000 - $10,080
= $29,920
Hence,
The correct answer is option (A) $29,920