Depreciation methods

Nevertire Ltd purchased a delivery van costing $52 000. It is expected to have a residual value of $12 000 at the end of its useful life of 4 years or 200 000 kilometres. Ignore GST. Required (a) Assume the van was purchased on 2 July 2019 and that the accounting period ends on 30 June. Calculate the depreciation expense for the year 20192020 using each of the following depreciation methods: i. straightline ii. diminishing balance iii. units of production (assume the van was driven 78 000 kilometres during the financial year).

(b)Assume the van was purchased on 1 October 2019 and that the accounting period ends on 30 June. Calculate the depreciation expense for the year 20192020 using each of the following depreciation methods: i. straightline ii. diminishing balance iii. units of production (assume the van was driven 60 000 kilometres during the financial year).

note the following

When an asset is purchased part way through a year you should round to a whole month. So for 2nd July assume they have owned it ALL of July.

For the diminishing balance method you are not expected to be able to calculate the percentage yourself. For this question use a percentage of 28% for this method.