Calculation Question: 2. Nevertire Ltd purchased a delivery van costing $32 000. It is expected to have a residual value of $12000 at the end of its useful life of 4 years or 200 000 kilometres. Required Assume the van was purchased on 2 July 2019 and that the accounting period ends on 30 June. Calculate the depreciation expense for the year 2019-2020 using each of the following
Calculation Question: 2. Nevertire Ltd purchased a delivery van costing $32 000. It is expected to have a residual value of $12000 at the end of its useful life of 4 years or 200 000 kilometres. Required Assume the van was purchased on 2 July 2019 and that the accounting period ends on 30 June. Calculate the depreciation expense for the year 2019-2020 using each of the following
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
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Use diminishing balance method
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Transcribed Image Text:Calculation Question:
2. Nevertire Ltd purchased a delivery van costing $32 000. It is expected to have a residual value
of $12 000 at the end of its useful life of 4 years or 200 000 kilometres.
Required
Assume the van was purchased on 2 July 2019 and that the accounting period ends on 30 June.
Calculate the depreciation expense for the year 2019-2020 using each of the following
depreciation methods:
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