Reference no: EM132627442

Question 1: On 31 December 2014 a new motor vehicle with a life of five years and no estimated residual value was purchased by a business at a cost of $23 000, net of GST. The diminishing-balance depreciation method is employed. At a rate of 25% p.a. what is the carrying value of the motor vehicle at 31 December 2016 after charging depreciation for that year?

Select one:

Option a. $15 000

Option b. $9703

Option c. $12 937

Option d. $17 250

Question 2: When estimates of useful life and residual value made for the purposes of calculating depreciation, in later years turn out to be materially incorrect and the asset has not reached the end of its useful life, the procedure to be followed is to:

Select one:

Option a. issue corrected financial statements for only the most recent three years.

Option b. issue corrected financial statements for all prior years.

Option c. spread the remaining depreciable amount over the remaining useful life.

Option d. ignore the problem since estimates are not expected to be exact anyway.