Question
Garrett has purchased a train engine for $300,000. The engine is expected to run for eight years (estimated average of 10,000 km a year), but
Garrett has purchased a train engine for $300,000. The engine is expected to run for eight years (estimated average of 10,000 km a year), but with lower mileage in the first two years (6,000 kms expected in year 1 and 8,000 kms expected in year 2). At the end of its life, the engine will have $3,000 of scrap value. Explain in detail (including depreciation method) how Garrett should expense the train engine Justify your choice of depreciation method. Also, discuss what a sample annual depreciation journal entry looks like- include sample numbers/calculations.
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