Tombe Transporters Ltd depreciates its fleet of trucks using a straight line method. The current accounting...
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Tombe Transporters Ltd depreciates its fleet of trucks using a straight line method. The current accounting year is coming to an end and external auditors are examining the books of accounts. However, they cannot get complete records concerning a truck which was acquired 3 years ago. Its current book value is Sh 1,800,000 while its purchase cost was Sh 4,200,000. This type of truck is usually disposed off after 5 years. a) Determine the linear function v= a + bt which relates the book value v and time in years t. Interpret a and b. b) What is the book value at the end of the 2nd year of the truck? c) Determine the disposal value of the truck stating any assumptions you may make. Tombe Transporters Ltd depreciates its fleet of trucks using a straight line method. The current accounting year is coming to an end and external auditors are examining the books of accounts. However, they cannot get complete records concerning a truck which was acquired 3 years ago. Its current book value is Sh 1,800,000 while its purchase cost was Sh 4,200,000. This type of truck is usually disposed off after 5 years. a) Determine the linear function v= a + bt which relates the book value v and time in years t. Interpret a and b. b) What is the book value at the end of the 2nd year of the truck? c) Determine the disposal value of the truck stating any assumptions you may make.
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