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 $16,800. He looked up the e of his truck on a popular web site and arrived at a value for his truck of $7,700 as of November 1, 2 2020. At that time, he used 55,900 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 $6,700. The apparatus to attach and operate the plow cost $2,500. In order to operate the truck on the streets, Joe was required to upgrade his driver's licence at a cost of 5960 per year ($80 per month), add commercial use to his truck insurance at $400 per month, and purchase a $3,280 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 67,000 kilometres, at which time it could be sold for $870. In the case of the plow, estimated units of production will also be 67,000 kilometres and the residual value is expected to be $2,500, after four years of use. Snow Care used the truck for 3,000 kilometres in the fiscal year ended December 31, 2020 and 15,600 kilometres during the fiscal year ended December 31, 2021 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, e.g. 52.75.) Depreciation Schedule: Units-of-Production method Year End Number of Units Calculation Depreciation amount per unit Year x Depreciation Expense Accumulated Depreciation Carrying Amount Vehicles 2020 3000 0.19 570 570 13030 2021 15600 0.19 2964 2964 10636 Equipment 2020 3000 2021 15600 Prepare the adjusting journal entries for depreciation of the assets for the fiscal years ended December 31, 2020 and 2021. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry 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 Account Titles and Explanation Debit Credit V (To record depreciation expense for truck) (To record depreciation expense for equipment) (To record depreciation expense for truck) (To record depreciation expense for equipment) 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 SNOW CARE Balance Sheet (Partial) 100 IT X 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 carr amount for the truck each year until it is fully depreciated. (Round answers to 0 decimal places, e.g. 5,275.) Depreciation Schedule: diminishing balance method Calculation Year End Depreciable amount = Depreciation Year Depreciation Rate Expense Accumulated Depreciation Carrying Amount Vehicles 2020 X 2021 2022 2019 2020
