Square plc purchases a cutting machine for £60,000 on 1 March 2010. The machine is estimated to have a useful economic life of 10 years, after which it can be sold for £8,000.

(a) Assuming Square plc uses the straight line depreciation method what would be the depreciation charge in the income statement for the year ending 30th April 2011? .

(b) What would be the NBV of the machine at the end of year 6?

(c) Assume a new machine comes onto the market. As a result Square plc decides to sell the original cutting machine at the end of February 2014 for

£40,000. What is the gain or loss on disposal?

(d) How is the disposal reported in each of the financial statements?