Fred's Freighthauling Ltd has a small fleet of delivery trucks. Each one is depreciated on the reducing balance method (rate 20 percent; half of that in the year of acquisition and in the year of disposal) with no salvage value. Truck 4 was purchased on 1 July 2013 for $46 000, and sold three years later, on 30 June 2016, for $15 000. The company's financial year-end is 31 December.

1. What was the total depreciation on truck 4 to the date of its disposal?

2. Based on your answer to question 1, write a journal entry to record the disposal of truck 4.

3. Redo questions 1 and 2, assuming the company uses straight-line depreciation at 15 percent per year and an estimated salvage value of $6000.

4. Calculate the different effects of the two depreciation methods on the company's 2016 profit. Ignore income tax effects.

5. What implications (if any) would the use of different depreciation methods by the company have for potential creditors or investors?

6. The use of different depreciation methods could affect financial performance comparisons between financial years for a particular company, and between different companies for the same financial year. How are these differences mitigated?