Hill Corporation purchased a new vehicle on Jan 4, 2019 for $158,000 cash. The vehicle has a useful life of 16 years or of 150,000 kilometres. After the useful life the vehicle will have a residual value of $2,000. The vehicle was used for 12,500 km in 2019 and 16,000 km in 2020.
Required:
a. Calculate the depreciation expense for 2019 and 2020 under each of the following methods:
i. Straight-line (4 marks)
ii. Double diminishing-balance (6 marks)
b. Calculate the carrying amount at the end of 2020 for the vehiclewhen the company is using the double diminishing balance depreciation method. (5 marks)
c. Record the journal entry for the cash purchase of the vehicle on Jan 4, 2019 and for its depreciation expense for the year ended December 31, 2020 under the straight-line method. (5 marks)
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