Question - Depreciation method:
Nevertire Ltd purchase a delivery van costing $52000 net of GST. It is expected to have a residual value of $12000 at end of its useful life of 4 years or 200,000 kilometres.
A. Assume the van was purchase on 2 July 2015 and that the accounting period ends on 30 June. Calculate the depreciation expense for the year 2015-2016 using each of the following depreciation methods:
1. Straight-line,
2. Diminishing balance,
3. Units production (assume the van was driven 78000 kilometers during the financial year).
B. Assume the van was purchase on 1 October 2015 and that the accounting period ends on 30 June. Calculate the depreciation expense for the year 2015-2016 using each of the following depreciation methods:
1. Straight-line,
2. Diminishing balance,
3. Units production (assume the van was driven 60000 kilometers during the financial year).