Reference no: EM132537285

Question -

A. Floro Couriers bought a delivery van on January 2 2020 for K19, 000. The van was expected to remain in service for four years (36,000 Miles). At the end of its useful life, Floro officials estimated that the Vans residual value would be K2, 800. The Van travelled 11, 000 miles the first year, 13, 000 miles, the second year 5,000 miles, the third year and 7,000 miles in the fourth year.

Required: Calculate the Depreciation expense and calculate the accumulated depreciation in each of the years.

i. Straight Line Depreciation

ii. Units of Production

iii. Double Declining Balance

iv. Sum of Years Depreciation

B. Assume that on the same date January 2, 2020 Floro purchased Equipment for K8, 800 cash, expecting the equipment to remain in service for five years. Floro has depreciated the Equipment on a Double Declining Balance basis, with K1, 300 estimated residual value. On August 31, 2020 Floro sold the Equipment for K2, 900 cash. Record both the depreciation values on the Equipment to the date of sale and the calculations to record the sale of the Equipment, showing the gain or loss on disposal of the asset.