Fred’s Freighthauling Pty Ltd has a small fleet of delivery trucks. Each one is depreciated on the reducing balance method (rate 20%). Truck 4 was purchased on the 1st July 2011 for $96000. Residual value was estimated at $16000 and useful life 10 years. It was sold on 31st March, 2015 for $40000. The company’s financial year end on 30th June each year.Calculate the difference of the two depreciation methods ( reducing balance method and straight line depreciation) on the company’s Profits for 2015. Ignore tax effects.
Depreciation Schedule using Straight Line Method 1st July 20111st July 20121st July 20131st July 201431st March 2015 DepreciationExpense$0$8,000$8,000$8,000$6,000 BookValue$96,000…
