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Calculate the monthly depreciation expense of delivery van

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Reference no: EM132525607

Question - On 1 January 2014 Modern Newspapers Limited [MNL] purchased a delivery van at $94,000 for cash. According to the motor car company, the van has a life of 10 years with second hand value. Management of MNL considered using it for 7 years with a salvage value of $10,000. Depreciation would be written off monthly in the account using straight line basis. On 1 July 2019, MNL sold the van at $20,000 in cash and used the money to buy a truck costing $150,000.

Required -

(i) Calculate the monthly depreciation expense of the delivery van using straight line method.

(ii) Calculate the profit or loss on disposal of the delivery van.

(iii) Prepare journal entries in respect of the disposal on 1 July 2019. (Note: Explanations are not required for journal entries)

Reference no: EM132525607

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