On 1st of January 2021, the company GET INSURED, Ltd. purchased a license for computer software to improve the management of the client portfolio.
The price of the license is $50,000 and its useful life 5 years
The same day, the company sells a vehicle of its fleet for $38,000. The company had purchased it on January 1st, 2019 for $96,000. The car had an estimated useful life of 5 years and an estimated salvage value of $6,000 at the date of the purchase.
- Prepare a complete amortization schedule for the license of the software using the straight line method (20 points)
- Prepare a complete depreciation schedule of the vehicle using the straight line method (20 points)
- Prepare a complete depreciation schedule of the vehicle using the double declining balance method (20 points)
- Record the journal entries for the sale of the vehicle taking into account that the company used the straight line method for depreciation purposes (15 points)
- Record the journal entries for the sale of the vehicle taking into account that the company used the double declining balance method for depreciation purposes (15 points)
- Explain the differences between the results of question 4 and 5. (10 points)
