Calculate the profit or loss on disposal of Vehicle A. Vehicle A was sold for $5200 on 30 June 2022. Delivery vehicles are depreciated at $25\%$ per annum by the straight-line method on a month-by-month basis. No depreciation is charged in the year of sale.
Calculate the total depreciation expense for delivery vehicles for the year ended 31 December 2022.
Prepare the statement of profit or loss for the year ended 31 December 2022. Use the space given on the next page to show your workings.
Explain the significance of an allowance for irrecoverable debts in a business’s financial statements.
Identify two ratios that may be used to assess a business’s liquidity position.
Advise Mima which option she should choose. Justify your choice by considering both options.