Question
Vert Ltd. purchased a vehicle on 1 January 20X8 for $88,000 and began to use it immediately. The estimated physical life of the vehicle is
Vert Ltd. purchased a vehicle on 1 January 20X8 for $88,000 and began to use it immediately. The estimated physical life of the vehicle is 20 years, but the estimated useful life to Vert is 10 years. The vehicle has an estimated residual value of $8,000. The vehicle is anticipated to be driven for 200,000 kilometres, and was driven 48,000 kilometres in 20X8 and 54,000 kilometres in 20X9.
Required: 1. Calculate depreciation expense for 20X8 and 20X9 using the straight-line method, units of production, and declining balance using a rate of 50%.
2. Repeat requirement 1 assuming that Vert decides that the useful life to Vert is 15 years, after which the residual value will be $9,550, and the total kilometres to be driven is now 300,000.
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