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Question

On 31st October 20X4 Frasca Freight Transport Ltd purchased a Mack

Titan truck which gave rise to the following general journal entry (narration deleted).

Additional information:
· Useful life of the Truck is 10 years or 5,000,000 kilometres. Straight line depreciation rate = 10%pa and Reducing Balance depreciation rate = 18%pa.
· Residual value is $100,000
The estimated kilometres to be travelled in the first five financial years are:

a.)Complete the depreciation schedules below for the Mack Titan truck for both of the units of production and reducing balance methods for the years ended 30th June 20X5, 20X6 and 20X7.  

ii) In addition to the units of production and the reducing balance methods of depreciation there is also the straight line method. Describe what the effects of each method are on depreciation expense and how the company decides on which of the three methods to adopt?

8.1.png
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Units of Production
Year ended
Opening
Depreciation
Accumulated
Closing
Balance
expense
Depreciation
Balance
Reducing Balance
Year ended
Opening
Depreciation
Accumulated
Closing
Balance
expense
Depreciation
Balance

Step-by-step answer

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Subject: Accounting, Business

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