Question

Stacey Ltd purchased a new machine on 1 September 2019 at a cost of $227,800 (excluding GST).
The entity estimated that the machine has a residual value of $30,400 (excluding GST).
The machine is expected to be used for 42,000 working hours during its 10 year life.
Assume a 31 December year-end.

Required                                                                                          

(a) Calculate the depreciation expense using the straight-line method for 2019 and 2020.
(b) Calculate the depreciation expense using the diminishing-balance method and a depreciation rate of 25% for 2019 and 2020.
(c) Calculate the depreciation expense using the units-of-production method for 2019, assuming the machine usage was 1,820 hours.
(d) On 31 December 2020 the company discarded a delivery truck that was purchased on 1 January 2016 for $22,990 cash (including GST of 10%) and was depreciated on a straight line basis with a useful life of 6 years and a residual value of $2090 (excluding GST).
What was the profit or loss on the scrapping of the truck?

Answer 1

19140 a) straight line method depreciation - cost of the Asiet - Quidual value perial luc fuel life of the anet 2019, depreciation - $227800 =/30400 x 4/2 10 yn * $6580 8080 depreciation $927800 - $30400 x 1 loyabr b) diminishing Balance Balance methed 2019 2020 Carrying value 227800 208816 6) depreciation@995) . $(18984) $2004) (824000x 255/449) careying vaul at $20 88 16 $156612 c) Amortisation methor. (units of production mether) depreciation - cost of the anet - Salvag valle x Actual Estimated total no of hours hows Works depreciation 227800 -30400 x 1820 hu for 2019 42000 h yearend $8554 CS Scanned with CamScanner

d) Straight truck Straight line method (profit or 1054) ) delivery truck (including ast@101) * 23.990 delivery (excluding aso) - 22990x100 depreciation cost of Alle-Savage valle expons per year useful life 80900-9090 80900 - 6 on dec 31stango Arnet Carrying value as - 3135 s cost of the - depreciation 20900 - (3135x4yn) = 20900- 18540 Truck was discarded so total = 8360 truck of $8360 should charged you "poo fit or loss carrying vame al profit or lost all $8360 ( To Pruck 8360 note ist Cosict) jan 2016 to 3ist dec 2020 -> uyes depreciation provided CS Scanned with CamScanner