Financial Accounting Assignment Solution ACC204 - Semester 1, 2019

This document provides a comprehensive solution to a financial accounting assignment (ACC204) focusing on depreciation methods. The assignment involves calculating annual depreciation charges for a delivery truck using the straight-line, sum-of-digits, declining-balance, and units-of-production methods. The solution includes detailed workings, calculations, and explanations for each method, addressing the requirements of the assignment brief. The assignment covers various scenarios and requires the application of accounting principles to determine the appropriate depreciation expense over the truck's useful life. The solution demonstrates the application of these methods in different years, considering factors like the truck's cost, residual value, and expected mileage. This resource is valuable for students studying financial accounting and provides a practical example of how to approach and solve depreciation-related problems. The solution adheres to the assignment's requirements, which include a cover sheet, detailed workings, and a low similarity rate.

Running head: FINANCIAL ACCOUNTING
Financial Accounting
Name of the Student:
Student ID:
Author’s Note:

1FINANCIAL ACCOUNTING
Table of Contents
Question 1: Sprintfast Couriers..................................................................................................2
Requirement (a):.....................................................................................................................2
Requirement (b):................................................................................................................2
Requirement (c):.....................................................................................................................2
Requirement (d):....................................................................................................................3
Question 2: Petersen Limited.....................................................................................................3
Question 3: Deliveries Limited and City Vans Limited.............................................................4
Requirement (a):.....................................................................................................................4
Requirement (b):....................................................................................................................4
Requirement (c):.....................................................................................................................5
Requirement (d):....................................................................................................................6
Question 4: Lightning Bolt Limited...........................................................................................7
Requirement (a):.....................................................................................................................7
Requirement (b):....................................................................................................................7
References:.................................................................................................................................8

2FINANCIAL ACCOUNTING
Question 1: Sprintfast Couriers
Requirement (a):
Requirement (b):
Requirement (c):
Calculation of depreciation rate:

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Requirement (d):
Question 2: Petersen Limited
Working Notes:

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Question 3: Deliveries Limited and City Vans Limited
Requirement (a):
Working Note:

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Requirement (b):
According to the provided information, the lease receipt in June 2023 indicates
unguaranteed residual on the basis that there is an expectation that the lessee would make the
payment and it would have the ownership of the truck. This implies that the lessee would
make the payment of $50,000 to the lessor, instead of returning the asset expected to have a
salvage value of $50,000. However, there would still be inclusion of unguaranteed residual
within the present value of the lease receivable (Spencer and Webb 2015). This is because the
lessor expects the truck to be returned having residual value of $50,000 after the end of the
lease, even if the lessee does not prefer taking ownership of the truck.
Requirement (c):

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Working Notes:
Depreciation expense is computed by keeping in mind that that the lessee would keep
the truck after the completion of the lease term.
Requirement (d):
The third entry and the fourth entry in the above table are made, as the truck is not
leased anymore. Instead, it is owned and there is a need that leased assets are to be disclosed

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distinctively from freehold assets (Barone, Birt and Moya 2014). Therefore, the balances of
the existing leased truck are moved across to the truck balances.
Question 4: Lightning Bolt Limited
Requirement (a):
Working Note:
Requirement (b):

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References:
Barone, E., Birt, J. and Moya, S., 2014. Lease accounting: A review of recent
literature. Accounting in Europe, 11(1), pp.35-54.
Spencer, A.W. and Webb, T.Z., 2015. Leases: A review of contemporary academic literature
relating to lessees. Accounting Horizons, 29(4), pp.997-1023.