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Nevertire Ltd purchased a delivery van costing $57 200 (GST Inclusive). It is expected to have a residual value of $12 000 at the end
Nevertire Ltd purchased a delivery van costing $57 200 (GST Inclusive). 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. 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 201920 using each of the following depreciation methods: straight-line ii. diminishing balance (assume that the depreciation rate under the diminishing balance method is 31%). 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 201920 using each of the following depreciation methods: straight-line ii. diminishing balance (assume that the depreciation rate under the diminishing balance method is 31%). iii. units of production (assume the van was driven 60 000 kilometres during the financial year)
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