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Record the journal entry for the cash purchase

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Question - Purple Corporation purchased a new vehicle on Jan 4, 2019 for $125,000 cash. The vehicle has a useful life of 10 years or of 120,000 kilometres. After the useful life the vehicle will have a residual value of $5,000. The vehicle was used for 9,500 km in 2019 and 11,000 km in 2020.

Required -

Calculate the depreciation expense for 2019 and 2020 under each of the following methods:

i. Straight-line

ii. Double diminishing-balance

Calculate the carrying amount at the end of 2020 for the vehicle when the company is using the Straight-line depreciation method.

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 double diminishing method.

Reference no: EM132902406

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