Exeter Execs has purchased a large delivery vehicle to assist with the ever-increasing deliveries which have...

  

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Exeter Execs has purchased a large delivery vehicle to assist with the ever-increasing deliveries which have been experienced during the Covid period. The managers are not sure whether to depreciate the vehicle using the diminishing balance method or the straight-line method and ask for your advice. The managers decide to depreciate the vehicle using the straight line method. The vehicte was purchased on 1 January 2021 at a cost ES5,000. It is expected to have a useful lis5 years after which time it would havea residual value of ES,000. First, provide the managers with advice on what should guide their decision in deciding between the diminishing balance method and the straight-line method. Second, provide details around all transactions relating to the depreciation of this vehicle in the Financial Staternents of Exeter Execs, for the financial years ending 2021 and 2022 Exeter Execs has purchased a large delivery vehicle to assist with the ever-increasing deliveries which have been experienced during the Covid period. The managers are not sure whether to depreciate the vehicle using the diminishing balance method or the straight-line method and ask for your advice. The managers decide to depreciate the vehicle using the straight line method. The vehicte was purchased on 1 January 2021 at a cost ES5,000. It is expected to have a useful lis5 years after which time it would havea residual value of ES,000. First, provide the managers with advice on what should guide their decision in deciding between the diminishing balance method and the straight-line method. Second, provide details around all transactions relating to the depreciation of this vehicle in the Financial Staternents of Exeter Execs, for the financial years ending 2021 and 2022

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Exeter Execs have to follow the diminishing balance method of depreciation since the us... View the full answer