Question 3 (10 Marks) Archie Stanton starts a trucking business on January 1", 2020. He decides to rent his premises in which to conduct his business and house his trucks. On January 1" he purchases 5 trucks each costing $255,000. Archie believes that the trucks have a useful life of 4 years. He also intends to offer delivery services over very long distances with heavily loaded trucks such that at the end of the 4 years they will each have a residual value of only $6,528. Archie has asked you to advise him on which depreciation method he should adopt for the preparation of his financial statements. He wants to consider the use of either straight- line depreciation or reducing balance depreciation since keeping track of the number of kilometres travelled by each truck will be too onerous for the use of the units of production method. You determine that the correct depreciation rate for the use of the reducing balance method is 60%. Archie has also decided to produce his financial statements on December 31" each year. You come back to Archie with the following tables that show how the Depreciation expense each year and the Carrying Value of the Trucks will vary based on the depreciation method chosen. Delivery Truck Details Stucks 56,528 each Strucks $255.000 each $1,275,000 312427366 Cost Price of the w Residual value of the trucks Depreciable Amount of the trucks Straight line depreciation each year for years Reducing Balance deportate $12.30 606 $310.50 Straight-Line Depreciation Allocation of the $1.242.360 Depreciable Amount De 1 2002 Cost of Trade........... 127.000 30.00 Acred Degree 99.770 TEXTO Amal Deporte Express 5310 5134 Reducing Balance Depreciation Allocation of the $1.242.360 Depreciable Amount Dec 231 30 Control Tracks... Arderer 3 0 $1.071.000 S.99.400 SM5.000 STOWO $1.242.00 000 5306.00 123.00 543