Question
Branson Ltd owns two delivery vehicles (each with a residual value of $5,500 and useful life of 4 years) and uses the straight-line method of
Branson Ltd owns two delivery vehicles (each with a residual value of $5,500 and useful life of 4 years) and uses the straight-line method of depreciation. The business closes its accounting records annually on 30 June. The following events and transactions occurred during the first 3 financial years. Ignore GST.
201920July 1Purchased a delivery truck from Mangrove Mountain Motors for $63,500 cash plus stamp duty of $660, and registration and third-party insurance of $890.June 1Made minor repairs to the truck for cash at a cost of $450.June 30Recorded annual depreciation.202021July 1Purchased a delivery van from Northern Motors for cash, $47,500. This van was a used vehicle which was expected to last 4 years from the date of purchase. Fitted four new tyres to the van at a cash cost of $1,400.June 30Recorded depreciation on both truck and van.202122July 1Paid $3,900 for an overhaul of the motor of the delivery truck. This expenditure is expected to extend the useful life by 1 year. The parts replaced in the truck were considered to have a carrying amount of $2,000. Installed a two-way radio in the delivery van at a cost of $1,700 to improve efficiency. This expenditure will not increase the useful life.June 30Recorded depreciation on both truck and van.
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