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Roberto Trucks Inc. purchased a delivery van on January 1, 2016. Assume this was the company’s only capital asset and that the company uses the ½ year rule in the year of acquisition and disposal for straight-line and double-declining balance depreciation methods. The following information is available.
The truck was driven 20,000 km in 2016.
Required:
- Calculate the depreciation for 2016 under each of the following methods:
- Usage
- Straight-line
- Double-declining balance
- Compare the depreciation expense and carrying amount for 2016 under each of these methods.
- If one of management’s objectives is to maximize 2016 net income, what method should be adopted?
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