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Financial Accounting by Robert Nothhelfer

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7Solutions for case studies

Solution to case 1: Depreciation and advance payments

Category: Knowledge/Application/Analysis
Time to solve: 15 minutes

Keywords:

Acquisition costs, depreciation and impairment, reversal of impairment, advance payments

The carpenter Karl Dach needs a new van. The van will be delivered on 18 January 20X1, payable within 1 week with a 1% discount or within 4 weeks net. Karl does not use the discount, so the van costs €28,800 net. For transfer and registration, the dealer charges €400 net. The useful life is estimated to be 5 years. The resale value after 5 years for the used vehicle is estimated at roughly €3,000.

1. Calculate the depreciation and prepare the depreciation schedule according to the straight line ...

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