Nevertire Ltd purchased a delivery van costing $52,000. 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. Ignore GST.Required:a) Assume the van was purchased on 1 July 2019 and that the accounting period ends on 30 June.Calculate the depreciation expense for the second year using each of the following depreciationmethod• straight-line• diminishing balance (depreciation rate has been calculated as 31%)units of production (assume the van was driven 50,000 kilometers in the first year and78,000 kilometres during the second financial year).b) Record the adjusting entries for the depreciation at the end of the second financial year usingstraight-line method.c) Show how the van would appear in the balance sheet prepared at the end of year 2 usingStraight-line method

Different assets are depreciated using different method depending on the type and usage of assets.

Answered: Nevertire Ltd purchased a delivery van…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The following transactions occurred during 2025. Assume that depreciation of 10% per year is charged on all machinery and 5% per year on buildings, on a straight-line basis, with no estimated salvage value. Depreciation is charged for a full year on all fixed assets acquired during the year, and no depreciation is charged on fixed assets disposed of during the year. Jan. 30 Mar. 10 Mar. 20 May 18 June 23 A building that cost $139,920 in 2008 is torn down to make room for a new building. The wrecking contractor was paid $5,406 and was permitted to keep all materials salvaged. Date Machinery that was purchased in 2018 for $16,960 is sold for $3,074 cash, f.o.b. purchaser's plant. Freight of $318 is paid on the sale of this machinery. A gear breaks on a machine that cost $9,540 in 2017. The gear is replaced at a cost of $2,120. The replacement does not extend the useful life of the machine but does make the machine more efficient. A special base installed for a machine in 2019 when the…
On 1 July 20X7 Brown Ltd bought a machine for GHS 48,000. The machine was depreciated at 25% per annum on a straight-line basis until 30 June 20X9. On 1 July 20X9, the machine was revalued to GHS 30,000. Brown Ltd considers that its remaining useful life is three years. According to IAS 16 Property, Plant and Equipment, what should be the depreciation charge for the year ended 30 June 20Y0 and the balance on the revaluation surplus as at 30 June 20Y0? (Ignore any transfer of excess depreciation.) Depreciation charge Revaluation surplus A GHS 8,000 GHS 4,000 B GHS 8,000 GHS 6,000 C GHS 10,000 GHS 6,000 D GHS 10,000 GHS 4,000
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Batman Inc. uses revaluation accounting for its Machinery. The following information has been provided. July 7, 2022: Purchased Machinery for $250 000 on account. Estimated Useful Life: 10 years Residual Value: $0 Depreciation Method: Straight-line (nearest full month) Frequency of Revaluation: Annually Valuation Data July 7, 2022: December 31, 2022: December 31, 2023: $250 000 $234 000 $220 000 Prepare the following journal entries for December 2022 and December 2023: 1. To record depreciation expense 2. To eliminate accumulated depreciation 3. To record change in reported value of asset
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