102 Helen Ossetia provides the following information for the year ended 31 May 2013 Buildings Machinery Motor vehicles Non-current assets $000 $000 $000 Cost 2 000 2 000 700 Accumulated depreciation at 31 May 2013 (120 (800) (300) Net Book Value 1880 1 200 400 Total $000 4 700 (1 220) 3 480 Depreciation charge for the year 40 400 100 540 A full year's depreciation is charged in the year purchase and no depreciation is charged in the year of disposal. Buildings and machinery are depreciated using the straight line method. Motor vehicles are depreciated using the reducing (diminishing) balance method. REQUIRED (a) Explain why Helen needs to depreciate her non-current assets. [3] (b) State three causes of depreciation of motor vehicles. [3] (c) Calculate the rate of depreciation used by Helen at 31 May 2013 to depreciate each class of non- current asset. [4) (d) Explain why machinery is usually depreciated using the straight line method while motor vehicles are usually depreciated using the reducing balance method. [4] Additional information During the year ended 31 May 2014: 1 Helen bought new machinery costing $720 000 and sold old machinery which had cost $160 000 The old machinery had been bought on 1 December 2011. 2 Helen bought a new motor vehicle. She traded in an old vehicle valued at $40 000 and paid the balance of $160 000, by cheque. The trade in vehicle had cost $100 000 and had a net book value of $60 000 at the date of disposal. 3 A new building costing $1 000 000 was completed during the year. REQUIRED (e) Complete the non-current asset schedule below for the year ended 31 May 2014 [16]