CAPITAL ASSETS

PART A

Good Grocers Inc. (GGI) has decided to add a delivery service to its business. On January 1, 2015 it purchased a car to use to deliver customer orders for $42,000, sales taxes were $5,800, they had the car painted with the store logo for $1,000 and spent $750 on the annual license fee. During the year they spent $3,000 on gas and $1,000 on maintenance costs. They expect to drive the car 200,000 kilometres and have no residual value. In 2015 they drove 25,000.

Required: a. Calculate the cost of the asset to GGI. Provide brief support for all items included in the cost and the reason any costs are not included. b. Record the depreciation expense for 2015 using the units of activity method.

PART B

Minnies Model Co. Purchased a piece of equipment which cost $68,900, has a $4,900 residual value, and an 8-year useful life on January 1, 2015. The companys year-end is December 31st.

Required :Calculate the depreciation expense for 2015 under: a. Straight-line b. Double-declining-balance

PART C

Seau Saddle Co. Purchased a machine on October 1, 2013 for $65,000. It has a $5,000 residual value and a 10-year useful life. On July 1, 2015 the machine is sold for $52,000. The company uses straight-line depreciation and had a December 31st year end.

Required: Prepare the journal entries for 2013 through 2015.