Can someone help me with this problem. At least get me started so I can figure out how to do this. Your manager, Mr. Smith, has asked you to prepare a report, for a client, based on the following inquiry (see below). This report will be reviewed by Mr. Smith and used to determine your progress in the last 6 months.

Good Time Adventures currently owns a 10-passenger van that is used to transport clients to and from its outdoor adventure sites. The van was purchased 5 years ago at a cost of $20,000. At that time, its useful life was estimated to be 5 years with a salvage value of $5,000.

The van is in need of some major repairs. It needs a new engine and transmission, new tires, and other minor miscellaneous maintenance. The engine and transmission are estimated to cost $4,000 and will extend the useful life of the van by 5 years. The new tires and other repairs are estimated to cost $1,200. The estimated salvage value at the end of the 5 years is $7,000.

Good Time Adventures is trying to decide if it should repair the existing van or trade it in for a new van. A local dealer has offered a trade-in value of $6,000 on the old van with a purchase of a new van costing $30,000. If the new van is purchased, Good Time Adventures plans to depreciate it using the units of production method. The units would be based on the number of miles driven. The new van is expected to have a salvage value of $10,000 after its useful life of 100,000 miles.

Prepare a 750–1,000 word report for your manager.

For full-credit, you must discuss/explain and calculate the following:

Show the calculations for
depreciation expense for the existing van (how depreciation is currently being expensed).
the repaired van (depreciation expense if the existing van is repaired).
the new van (explain how depreciation would be calculated if the new van is purchased).
Show the journal entries you would record if
the existing van is repaired.
a new van is purchased.
Explain how you record each of the decision options:
Repair the existing van.
Trade in the van for a new van.
Explain how you would account for the repairs on the existing van. Are they expenses, assets, or both?
Recommend a course of action regarding the van.

To prepare the report, you need to analyze the cost and benefits of repairing the existing van versus trading it in for a new van. Here are the steps you can follow to address each section of the report:

1. Depreciation Expense for the Existing Van:
- Calculate the current depreciation expense for the van. It was purchased 5 years ago for $20,000 with a useful life of 5 years and a salvage value of $5,000.
- Use the straight-line depreciation method to calculate the annual depreciation expense: (Cost - Salvage Value) / Useful Life.
- Show the calculations and provide the depreciation expense for each year.

2. Depreciation Expense for the Repaired Van:
- Consider the cost of repairs, estimated to be $4,000 for the engine and transmission and $1,200 for tires and other maintenance.
- Calculate the new salvage value for the van at the end of the extended useful life. It is estimated to be $7,000.
- Use the straight-line depreciation method and the new values to calculate the annual depreciation expense for the extended useful life.
- Show the calculations and provide the depreciation expense for each year.

3. Depreciation Expense for the New Van:
- Explain the units of production method of depreciation. It is based on the number of miles driven.
- The new van has a useful life of 100,000 miles and an estimated salvage value of $10,000.
- Calculate the depreciation expense per mile: (Cost - Salvage Value) / Useful Life in miles.
- Show the calculations and explain how depreciation would be recorded for each mile driven.

4. Journal Entries for Repairing the Existing Van:
- Explain the journal entry process for recording expenses related to repairs.
- Use the repair cost of $4,000 for the engine and transmission and $1,200 for tires and other maintenance.
- Show the journal entries for recording the repair expenses.

5. Journal Entries for Purchasing a New Van:
- Explain the journal entry process for recording the purchase of a new van.
- The dealer offers a trade-in value of $6,000 for the old van and a purchase price of $30,000 for the new van.
- Show the journal entries for trading in the old van and purchasing the new van.

6. Accounting for Repairs on the Existing Van:
- Explain whether the repairs would be recorded as expenses, assets, or both.
- Discuss the criteria for classifying expenses versus assets and how it applies to the repairs on the existing van.

7. Course of Action Recommendation:
- Based on your analysis, recommend a course of action regarding the van.
- Consider the costs, benefits, and estimated useful life of the repaired van versus the new van.
- Provide a rationale for your recommendation, considering financial and operational factors.

Make sure to include all the necessary calculations, explanations, and journal entries in the report. It should be 750-1,000 words and address each section thoroughly.

To calculate the depreciation expense for the existing van, you need to determine the annual depreciation based on its original cost, estimated useful life, and salvage value.

1. Calculate the depreciation per year:
Depreciation = (Cost - Salvage Value) / Useful Life

In this case, the cost of the van was $20,000, the salvage value is $5,000, and the useful life is 5 years.

Depreciation = ($20,000 - $5,000) / 5
Depreciation = $3,000 per year

2. To calculate the depreciation expense if the existing van is repaired, you need to consider the additional repairs and their impact on the useful life and salvage value.

Since the repairs are estimated to cost $1,200, extend the useful life by 5 years, and increase the salvage value to $7,000, the calculations would be as follows:

Depreciation = (Cost - Salvage Value) / Useful Life

Cost = $20,000 + $1,200
Salvage Value = $7,000
Useful Life = 5 + 5

Depreciation = ($21,200 - $7,000) / 10
Depreciation = $1,520 per year

3. If a new van is purchased, depreciation would be calculated using the units of production method, based on the number of miles driven. The new van is expected to have a useful life of 100,000 miles and a salvage value of $10,000.

Depreciation per mile = (Cost - Salvage Value) / Useful Life in miles

Cost = $30,000
Salvage Value = $10,000
Useful Life = 100,000 miles

Depreciation per mile = ($30,000 - $10,000) / 100,000
Depreciation per mile = $0.20 per mile

4. If the decision is made to repair the existing van, you would record the repair expenses as expenses on the income statement. The repairs would not affect the depreciation expense calculation, as it is already accounted for in the calculations mentioned earlier.

5. If the decision is made to trade in the van for a new van, you would record the trade-in value of $6,000 as a credit to the van's asset account and a debit to cash (if the trade-in results in a cash inflow). The purchase of the new van would be recorded as a debit to the new van's asset account and a credit to cash or accounts payable, depending on whether it was purchased with cash or on credit.

6. The repairs on the existing van would be recorded as expenses since they are necessary maintenance costs to keep the van in operation. These expenses would be recognized in the income statement, reducing the company's net income.

7. Based on the information provided, you can recommend a course of action regarding the van by analyzing the costs and benefits of each option. Consider factors such as the costs of repairs, trade-in value, and the depreciation expenses over the useful life of the repaired van and the new van. You can compare these costs and benefits to make an informed decision and provide a recommendation to your manager.