Final answer:
The total amount of depreciation allowed for the crawler dozer tractor is $87,750, calculated by subtracting the residual value of $47,250 from the original cost of $135,000.
Step-by-step explanation:
To calculate the total amount of depreciation allowed on the crawler dozer tractor, we need to subtract the residual value from the original cost and then divide by the useful life of the tractor in hours.
The original cost of the tractor is $135,000. We have a residual value of 35%. To find the residual value in dollars, we multiply the original cost by the percentage of residual value:
Residual Value = Original Cost x (Residual Value Percentage / 100) = $135,000 x (35 / 100) = $47,250.
Now, we subtract the residual value from the original cost to find the total amount that will depreciate over time:
Total Depreciation = Original Cost - Residual Value = $135,000 - $47,250 = $87,750.
Therefore, over the useful life of 7,700 hours, the total amount of depreciation allowed is $87,750.