Vietnam Pty Ltd purchased a truck for cash for $52,000 plus 10% GST on January 1, 2010. At the time of purchase it was estimated that the useful life of the vehicle would be 100,000 kilometres and it was expected that it would travel that distance over four years. At the end of four years of useful life it was calculated that the truck could be sold for $12.000. The accounting period for Vietnam Pty Ltd is the financial year.
| Year ending 30 June: |
June: |
| 2010 |
10,000 kilometres |
| 2011 |
25,000 kilometres |
| 2012 |
30,000 kilometres |
| 2013 |
22,000 kilometres |
| 2014 |
8,000 kilometres |
The actual distance covered by the truck was as follows:
Required:
a) Calculate depreciation for the years ending 30th June 2010 to 30 June 20'14 using the units of production method.
b) Prepare general journal entries to record the depreciation, using the straight-line method, for the period 1 January 2010 to 30 June 2012.