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(a) (b) Briefly explain three reasons why businesses provide for depreciation on their non current assets (3 marks) Explain the two different methods of depreciation

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(a) (b) Briefly explain three reasons why businesses provide for depreciation on their non current assets (3 marks) Explain the two different methods of depreciation used by a business and its suitability for use in depreciating the different types of non-current assets: 6) Straight-line method of depreciation (2 marks) Reducing balance method of depreciation (2 marks) (c) s Additional information The following information has been extracted from the books of secount of Greenview Ltd at 1 May 2020 Machinery Cost 390 000 Provision for depreciation 174 000 During the year ended 30 April 2021, the following transactions occurred: 1 A machine was sold for $25 000 cash. This machine was purchased for S90 000 on 20 August 2017 A new machine was purchased to replace the disposed machine at a purchase price of $120 000. The following additional cost were incurred for the new machine: 5 Installation and modification cost 18000 Annual insurance and road tax 4600 All the above transactions were paid by cheques. The business depreciates all its machinery at a rate of 20% per annum using straight-line method. A full year's depreciation is charged in the year of purchase, but none in the year of sale. You are required to prepare the following ledger accounts for the year ended 30 April 2021 (Dates are not required) Machinery at cost account (i) Provision for depreciation of machinery account (6 marks) (i) Disposal of machinery account (4 marks) Prepare an extract from the Statement of Financial Position for machinery at 30 April 2021 (5 marks) (d) (3 marks) Total: 25 marks

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