Cameron Ltd purchased a truck for cash for $52,000 on January 1, 2012. At the time of purchase it was estimated that the useful life of the vehicle would be 100,000 kilometres and it was expected that it would travel that distance over four years. At the end of four years of useful life it was calculated that the truck could be sold for $12,000.
The actual distance covered by the truck is as follows:
Year ending 30 June:
2012 10,000 kilometres
2013 25,000 kilometres
2014 30,000 kilometres
2015 22,000 kilometres
2016 8,000 kilometres
a. Prepare general journal entries to record the purchase of the truck and for depreciation, using the straight-line method, for the period 1 January 2012 to 30 June 2014. Narrations are required.
b. Prepare an extract from the statement of financial position for the vehicle as at 30 June 2014 using the straight-line method of depreciation.