Super Industries purchased a new vehicle on 1 May for £28 000.Upon delivery the vehicle required a new two-way radio to be installed before it could be used.This installation was completed on 30 June.Assuming a residual value of £4000 and a declining balance rate of 20 per cent,calculate the depreciation expense recorded at the end of the first two financial years since purchase.(Financial Year ends on 30 June,round to the nearest pound.)

Question

Quizplus · Accepted Answer

The vehicle was not ready for use until 30 June, so no depreciation is recorded in the first financial year. In the second year, depreciation is calculated as 20% of (£28,000 - £4,000) = £4,800.

Super Industries Purchased a New Vehicle on 1 May for £28