A)Briefly describe the purpose of depreciation informulating accounting statements, and illustratetwo widely used methods of calculating it, together with thecircumstances in which each might be appropriate. (6 marks)

(B)A Company depreciates its plant at the rate of 25 per cent per annum straight line method for each month of ownership. From the following details draw up the plant account, the provision for depreciation account and the plant disposal account for each of the years, 2014, 2015, and 2016.

2014Bought plant costing K 2 600 000 on 1 January

Bought plant costing K 2 100 000 on 1 October

2015Bought plant costing K 2 800 000 on 1 September

2016Sold plant which had been bought for K 2 600 000 on 1 January 2014 for the sum of K 810 000 on 31 August 2016.