On 1st September 2011, Richardson's Racehorse transport Ltd purchased a Horse transport vehicle for $190 000. The

Question:

On 1st September 2011, Richardson's Racehorse transport Ltd purchased a Horse transport vehicle for $190 000. The vehicle has an expected life of five years, or 250 000 kilometres, and has a of $10 000. Kilometres travelled in the first three years were:

Richardson's Racehorse Transport prepares its financial reports for the calendar year.
Required:
a) Using the straight-line depreciation method:
i) State the formula for straight-line depreciation.
ii) Calculate depreciation expense for years 1 and 2.
iii) Calculate the carrying value of the vehicle in the balance sheet at the end of year 2.
b) Explain the terms:
i) Depreciation.
ii) Accumulated depreciation.

Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...