## Depreciation:

Depreciation is a non-cash expense allowed in the profit and loss statement as a way of writing off acquisition costs. There are different methods for depreciation acquisition costs. Some of the methods include straight-line method, double decline balance, units of production, the sum of years digits and modified accelerated recovery cost system (MARCS). In order to enjoy depreciation tax benefits, a company is required to use MARCS to write off the acquisition costs.

The number of years can be determined using the following formula.

• {eq}Number\ of\ years = \frac{Accumulated\ depreciation}{Depreciation\ per\ year} {/eq}

We will use the following formula to determine the accumulated depreciation.

• {eq}Cost - Accumulated\ depreciation = Book\ value {/eq}

Therefore,

• {eq}$30,100 - Accumulated\ depreciation =$12,100 {/eq}

We solve for Accumulated depreciation

• {eq}$30,100 -$12,100 = Accumulated\ depreciation {/eq}
• {eq}$18,000 = Accumulated\ depreciation {/eq} The number of years is calculated as follows. • {eq}Number\ of\ years = \frac{\$18,000}{\$2,250} {/eq} • {eq}Number\ of\ years = 8 {/eq} After 8 years, the car value will be$12,100