Question
C. Harvey, a sole trader purchased a delivery van on 1 March 2020 for 11,360 and some new equipment on 1 September 2020 for $7,000.
C. Harvey, a sole trader purchased a delivery van on 1 March 2020 for 11,360 and some new equipment on 1 September 2020 for $7,000.
He expects that the van will have a useful life of four years, after which it should have a trade-in value of $2,000. The scrap value of the equipment after ten years use is estimated to be $1,000. Harvey charges depreciation using the straight-line method.
What should the depreciation expense be in relation to these two items for Harveys financial year ended 30 November 2020 assuming that:
(a) He charges a full years depreciation in the year of purchase and none in the year of sale.
(b) He charges depreciation on monthly basis.
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