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You are the accountant for a chain of diners in
You are the accountant for a chain of diners in pizza and Italian food restaurants. The company is owned by the founder plus ten other investors who aren't involved in the management of the chain. These investors rely on the financial statements to evaluate how the company is doing. The chain has recently started a home delivery service for its pizza so that people could enjoy hot and fresh gourmet style restaurant pizza in their homes. After a trial period, the chain purchased ten cars to make deliveries. You have to prepare the yearend financial statements for the restaurant and have to decide how to depreciate the car. What depreciation method, useful life, and residual value would you assign to the cars? Explain your decision fully and discuss the factors you considered. Assume the restaurant prepares its financial statements in accordance with IFRS. The cars cost $200,000.
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