Stacey Ltd purchased a new machine on 1 September 2019
at a cost of $227,800 (excluding GST).
The entity estimated that the machine has a residual value of
$30,400 (excluding GST).
The machine is expected to be used for 42,000 working hours during
its 10 year life.
Assume a 31 December year-end.
(a) Calculate the depreciation expense using the straight-line method for 2019 and 2020.
(b) Calculate the depreciation expense using the diminishing-balance method and a depreciation rate of 25% for 2019 and 2020.
(c) Calculate the depreciation expense using the units-of-production method for 2019, assuming the machine usage was 1,820 hours.
(d) On 31 December 2020 the company discarded a delivery truck that was purchased on 1 January 2016 for $22,990 cash (including GST of 10%) and was depreciated on a straight line basis with a useful life of 6 years and a residual value of $2090 (excluding GST).
What was the profit or loss on the scrapping of the truck?
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