Joe Heffernan decided to start a snow removal business in his neighbourhood, which he called Snow Care. He invested his used truck into the business on November 1, 2020. Joe had purchased the truck on November 1, 2017, for $15,700. He looked up the fair market value of his truck on a popular web site and arrived at a value for his truck of $6,680 as of November 1, 2020. At that time, he used $2,600 from his savings account to pay for the overhaul needed in order to prepare the truck for pushing a heavy plow. Then, after investing additional cash into the business, Snow Care was able to purchase, on November 5, a brand new snow plow to be attached to the truck, at a cost of $3,300. The apparatus to attach and operate the plow cost $700. In order to operate the truck on the streets, Joe was required to upgrade his driver's licence at a cost of $540 per year ($45 per month), add commercial use to his truck insurance at $1,400 per month, and purchase a $1.580 business licence that was valid for one year. Based on its seasonal operations, Joe determined that his business should depreciate the truck and plow using the units-of- production method. When making this decision. Joe also considered the estimate of the residual values of these two assets. He believes that the truck will last another four years and be driven a total of 66,000 kilometres, at which time it could be sold for $700, In the case of the plow, estimated units of production will also be 66,000 kilometres and the residual value is expected to be $700. after four years of use Snow Care used the truck for 2.500 kilometres in the fiscal year ended December 31, 2020 and 16,000 kilometres during the fiscal year ended December 31, 2021 Your answer is correct. What costs should Snow Care use to record the investment of the truck and the purchase of the plow? Cost of the truck: Costs to prepare the truck for use Value of the truck when transferred Total cost Purchase of the plow: 2600 6680 9280 Purchase cost 3300 Costs to prepare the equipment for use 700 Total cost 4000 (b) Your answer is correct. Prepare the journal entries for the investment of the truck and the cash purchase of the plow. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Record journal entries in the order presented in the problem.) Date Nov. 1,2020 Nov. 5,2020 Account Titles and Explanation Vehicles J. Heffernan Capital Equipment Cash Debit Credit 9280 4000 9280 4000 Question 6 of 10 > 17.63/21 E Prepare a schedule for the calculation of the depreciation expense, the accumulated depreciation, and the carrying amount of Snow Care's assets for two fiscal years. (Round per kilometre cost to 2 decimal places, eg. 52.75) Depreciation Scheduler Units of Production method Osearch for anything Calculation Year Number of Units Depreciation amount per unit Depreciation Expense Ao De Vehicles 2020 2500 $ 2021 16000 Equipment 2020 2021 a 0:13 $ 0.13 325 2060 2500 05 125 16000 0.05 800 Question 6 of 10 Date Account Titles and Explanation Debit Dec 31, 2020 Depreciation Expense 325 Dec. 31,2020- Dec. 31, 2021 v Dec. 31, 2021 Accumulated Depreciation Vehicles (To record depreciation expense for truck) Depreciation Expense Accumulated Depreciation-Equipment (To record depreciation expense for equipment) Depreciation Expense Accumulated Depreciation-Vehicles (To record depreciation expense for truck) Depreciation Expense Accumulated Depreciation-Equipment (To record depreciation expense for equipment) C 125 17.63/21 E Credit 325 125 2000 2060 800 800 120 ENG 2020 Provide the balance sheet disclosure of Snow Care's long lived assets at December 31, 2021. (List Property, plant and equipment in order of vehicles and equipment) SNOW CARE Balance Sheet (Partial) December 31, 2021 Property, Plant and Equipment Vehicles Less Equipment 5 Accumulated Deprecation Vehicles Liss : Accumulated Depreciation-Equipment Total Property Plant and Equipment 2405 9260 4000 6875 925 i 3075 $ 9950 Snow Care is considering using the double diminishing balance method instead of the units of production method. Prepare a depreciation schedule using double diminishing balance to show depreciation expense, accumulated depreciation, and carrying amount for the truck each year until it is fully depreciated. (Round answers to O decimal places, eg. 5,275.) Depreciation Schedule: diminishing balance method Year Depreciable amount Calculation Depreciation Rate Depreciation Expense Acc De Vehicles 2020 $ 2145 2023 % $ 434 $ 2021 2145 20.23 % 434 2022 2145 20.23% 434 2023 2145 20.23 % 434 2024 2145 20.23 % 434 Question 6 of 10 17.63/21 E Snow Care is considering using the double diminishing balance method instead of the units of production method. Prepare a depreciation schedule using double diminishing balance to show depreciation expense, accumulated depreciation, and carrying amount for the truck each year until it is fully depreciated. (Round answers to O decimal places, eg 5,275) Depreciation Schedule: diminishing balance method Calculation Depreciation Rate Depreciation Expense Year End Accumulated Carrying Depreciation Amount $ 9280 20.23 % $ 434 S 434 3846 20.25 % 434 868 7978 20.23% 434 1302 6676 20.23 % 434 1736 4940 2023 % 434 2170 2770