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Sunny Lawns Services purchased a new vehicle on 1 July 2020. The vehicle cost $67,000;...

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Accounting

Sunny Lawns Services purchased a new vehicle on 1 July 2020. The vehicle cost $67,000; the vehicle needed to be fitted with an attached toolbox to make it useful for the business costing $5,550. With the new fit out it was estimated that the vehicle would have a useful life of five (5) years and a salvage value of $2,500.

Required:

  1. What was the cost of the vehicle to Sunny Lawns Services?

[1 mark]

  1. What will the amount of accumulated depreciation and the carrying value of the asset be at the 30 June 2023, if we were to use the straight-line depreciation method?

[2 marks]

  1. What would be the amount of accumulated depreciation and the carrying value of the asset at the 30 June 2023, if we were to use the diminishing balance method of depreciation?

[2 marks]

  1. If we sold the vehicle for $12,500 at the 30 June 2023 what profit or loss would occur under b. and c.?

[2 marks]

  1. Do we record depreciation in the Cash Flow Statement? Give the reason for your answer (Maximum 100 words)

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