R IS 304 You are running a transportation business You have all of your vehicles in use at full capacity therefore you are required to purchase a new vehicle in order to smooth the transportation service in the market You purchased the vehicle at the start of the month of August 2020 When you purchased its actual cost worth Rs 380 R (tax 8 ), in other costs you paid registration fee Rs 8 R, change of tires Rs 7 5 R, painting cost Rs 33 R, and advance salary to the driver, Rs 20 R and fuel cost Rs 5 R The vehicle has capacity of 1500,000 miles to cover (Round the figures to nearest 10) R IS 304 Calculate depreciation expense per mile Prepare schedule for depreciation of the vehicle by using appropriate method Suppose the vehicle is expected to be useful for 8 years, and it would be sold when its value drops to Rs 10,000 Calculate depreciation rate Prepare schedule for depreciation of the vehicle with declining balance method Prepare general entry for the purchase of vehicle Suppose your vehicle is sold for Rs 5000 Calculate the gain or loss Suppose your machine is sold for Rs 15000 Calculate the gain or loss How depreciation method effects tax liability Show the depreciation trend with the help of graph of the two methods illustrated in part ii and iv Which method you think is suitable under which situation and why

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R IS 304 You are running a transportation business. You have all of your vehicles in use at full capacity therefore you are required to

R IS 304

You are running a transportation business. You have all of your vehicles in use at full capacity therefore you are required to purchase a new vehicle in order to smooth the transportation service in the market. You purchased the vehicle at the start of the month of August 2020. When you purchased its actual cost worth Rs. 380*R (tax 8%), in other costs you paid registration fee Rs.8*R, change of tires Rs.7.5*R, painting cost Rs. 33*R, and advance salary to the driver, Rs.20*R and fuel cost Rs. 5*R. The vehicle has capacity of 1500,000 miles to cover. (Round the figures to nearest 10). R IS 304

Calculate depreciation expense per mile.
Prepare schedule for depreciation of the vehicle by using appropriate method.

Suppose the vehicle is expected to be useful for 8 years, and it would be sold when its value drops to Rs. 10,000.

Calculate depreciation rate.
Prepare schedule for depreciation of the vehicle with declining balance method.
Prepare general entry for the purchase of vehicle.
Suppose your vehicle is sold for Rs. 5000. Calculate the gain or loss.
Suppose your machine is sold for Rs. 15000. Calculate the gain or loss.
How depreciation method effects tax liability?
Show the depreciation trend with the help of graph of the two methods illustrated in part ii and iv.
Which method you think is suitable under which situation and why?