Question: 5

i. On March 01, 2020, DHL purchased a delivery truck for $100,000. The truck has an estimated useful life of 200,000 miles with a salvage value of $10,000. In the year 2020, DHL used the vehicle for 1,000 miles. What is the depreciation expense for this truck in 2020? Assume DHL uses activity method of depreciation.

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ii. Nikola Company purchased equipment for $40,000. Sales tax on the purchase was $600. Other costs incurred were freight charges of $350, transit insurance of $400 and installation costs of $365. What is the cost of the equipment? Show proper calculation.

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iii. How to calculate depreciation on land? 1 iv. Dow Chemical sells equipment for $20,000 cash. The equipment originally cost $48,000 and has accumulated depreciation of $35,000. Calculate the gain or loss on the sale.