Colbeck Castle Limited $($CCL$)$ is a distributor of household products, located in Colbeck Hills, Portland. The company has three divisions, Kitchen, Bathroom and the Luxury division. The company was incorporated on the $1$st of January $2019$ with a share capital of $12,000,000$ ordinary shares of $$4.$ On the date of the incorporation the company acquired two $(2)$ delivery trucks at a cost of $$12,000,000$ each and decided to depreciate the trucks using the units of output method. The company planned to keep the trucks for a useful life of $300,000$ miles each. The residual value of each truck is estimated to be $$1,000,000.$

On January $1,2020$ CCL issued $8\%$ convertible bonds at their nominal value of $$27,000,000.$ The bonds are convertible at any time up to maturity into $50$ ordinary shares for each $$600$ of bond. Alternatively, the bonds will be redeemed at par after $4$ years. Similar non$-$convertible bonds carry an interest rate of $10\%.$On January $12021,$ the company issued $2,000,000$ ordinary shares at a

price of $$5\mathrm{.}50$ which was fully subscribed. This was followed by a bonus issue of $1$ share for $5$ held on that date, funding came from the share premium account which at that date had a balance of $$1,700,000$ and retained earnings a balance of $$2,520,000.$Management of the company decided on the $30$ November $2022$ to close down the Luxury division because it was deemed to be under performing. Management held a meeting with the employees

of this division in March $2023$ and informed of its impending actions. The employees were informed that a buyer has been located and the sale would be completed by May $2023.$ The division was sold on $15$ May $2023$ for $$150,000,000.$On June $30,2022$ one of the delivery trucks is involved in an accident and is sold for $$700,000.$ CCL replaces this truck with a new truck at a cost of $$11,000,000.$ The residual value of this truck will $$1,200,000$ after it is used for $300,000$ miles.On January $1,2023$ the directors of the company decided to acquire a specialised computer system under a five $(5)-$year lease commencing on that date. The computer systems remaining expected

useful life is six $(6)$ years. Five $(5)$ payments are due to the lessor in the amount of $$2,700,000$ per year beginning December $31,2023.$ The lessee$$s incremental borrowing rate is $15\%$ and the rate lessor$$s implicit rate is $12\%.$

CASE QUESTIONS

$1.$ Calculate the total depreciation to be charged on delivery trucks for the year ended $31$ December $2022.$ The annual mileage of the trucks is given below: Annual Mileage of Trucks for yr $2019,2020,2021,2022$

Truck $160,00070,00090,00050,000$

Truck $2-$Truck sold $55,00070,00056,00044,000$

Truck $3-$New truck $25,000$