Malcolm Limited acquired a truck to deliver and install its specialized products at the customer's site. The
Question:
Malcolm Limited acquired a truck to deliver and install its specialized products at the customer's site. The vehicle's list price was $135,000, but customization added another $30,000 in costs. Malcolm took delivery of the truck on September 30, 2020, with a down payment of $15,000, signing a four-year, 8.0% note for the remainder, payable in equal payments of $43,488 beginning September 30, 2021. Malcolm expected the truck to be usable for 500 deliveries and installations. After that, the product's technology would have changed and made the vehicle obsolete. In late July 2023, the truck was destroyed when a concrete garage collapsed. Malcolm used the truck for 45 deliveries in 2020, 125 in 2021, 134 in 2022, and 79 in 2023. The company received a cheque for $12,000 from the insurance company and paid what remained on the note.
Required : all entries that are needed to record the events and activities related to the truck, the note, and its interest, including the depreciation expense on the truck each year. Assume that Malcolm uses an activity approach to depreciate the truck, and bases it on deliveries.
Intermediate Accounting
ISBN: 978-1119048534
11th Canadian edition Volume 1
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Nicola M. Young, Irene M. Wiecek, Bruce J. McConomy