Frank Ltd purchased a vehicle on 1 July 2021, at a cost of $68,000, plus delivery of $1,200. The estimated useful life of the car is 8 years, with an estimated residual value at the end of that period of $12,000. The entity is considering different depreciation methods that could be used for financial reporting purposes for the year ended 30 June 2022.

The diminishing balance method uses a depreciation rate of 18.75%.

Required:

a. Calculate the depreciation expense and carrying value of the asset at 30 June 2022, using the straight-line method.

[3 marks]

b. Calculate the depreciation expense and carrying value of the asset at 30 June 2022, using the diminishing balance method.

[3 marks]

c. Which method would result in a lower reported profit for the year ending 30 June 2022?

[2 marks]

d. The following is an accounts receivable ageing schedule as at 30 June 2022 for Frank Ltd.

Ageing	Amount Owing	Estimated % not expected to be collected
0-30 Days	$50,000	2%
31-60 Days	$35,000	5%
61-90 Days	$12,000	10%
>90 Days	$10,000	15%
Total	$107,000

Determine the estimated amount of the allowance for doubtful debts as at 30 June 2022. [3 marks]