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On January 1, 2017, Murray Demolition, a Hamilton, Ontario, company specializing in blasting and removing buildings, purchased and took delivery of a new dump truck
On January 1, 2017, Murray Demolition, a Hamilton, Ontario, company specializing in blasting and removing buildings, purchased and took delivery of a new dump truck to add to its growing fleet. Murray Demolition has a high-class reputation and uses only the best and newest equipment on their worksites. The business spent $140,000 plus HST on the truck, which is expected to be useful to the business for four years, at which time it should be able to be sold for $60,000. Murray Demolition has always used the straight-line basis of calculating amortization. The new owners want to see the amortization schedules for the straight-line, UOP and DDB methods just to be sure this makes sense. The business expects the truck to be useful for 200,000 kilometres - 60,000 kilometres in Year 1, 50,000 kilometres in each of Years 2 and 3, and 40,000 kilometres in Year 4. Required: Calculate an amortization schedule for each of the three methods - straight-line, units of production (UOP) and double declining balance (DDB). Required: Do you think Murray Demolition should change their accounting amortization policy? A
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