Show extracts from fate income statement

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Fate commenced in business as an executive taxi service on Ist January 2019. She purchased two cars, a Mercedes for $20,000 and a BMW for $36.000. In March 2020 the Mercedes was involved in a collision and damaged beyond repair. The insurance company gave Fate $15,000 in settlement of her claim. She replaced the Mercedes with an Audi at a cost of $40,000 in April 2020. Fate's accountant adopted a policy of charging a full year's depreciation in the year of acquisition and no depreciation in the year of disposal. It is assumed that the cars will be used until the end of their useful life and thus will have no residual value.

Required:

Problem a. Show extracts from Fate's income statement and statement of financial position for the years ended 31 December 2019 and 2020 on the basis of:

Problem b. Depreciation using the straight line method over 10 years.

Problem c. Depreciation at 20% using the reducing balance method.

Reference no: EM132844172

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