A motor vehicle was purchased for $160,000 on 1^st January, 2017. It is estimated that it has a useful life of 4 years and will then be sold for $10,000. The financial year ends on 31^st December.

For the diminishing balance method, the firm uses a 50% depreciation rate.

Question 1 (13 marks) A motor vehicle was purchased for $160,000 on 1St January, 2017. It is estimated that it has a useful life of 4 years and will then be sold for $10,000. The nancial year ends on 31St December. For the diminishing balance method, the rm uses a 50% depreciation rate. (a) How much depreciation would be shown on the Income Statement for each of the 4 years using the straight-line method? (b) Calculate depreciation for the rst 2 years using the diminishing balance method Year Bal. at beginning of year Rate Yearly depreciation on Bal. at end of year Income Statement 2017 50% 2018 50% (c) Complete the items below as they would appear on the Balance Sheet at 31 December, 2018. Straight Line 31 December 2018 $ Diminishing Balance 31 December 2018 $ Motor Vehicle Motor Vehicle Less Accumulated Less Accumulated Depreciation Depreciation Written dovvn value Written dovvn value (e) Which method causes the higher profit gure for 2018? By how much is the prot higher? Question 2 (7 marks) The list of account balances for Cayden Enterprises, a sole trader, at 31 March is: Accounts payable $20 ,000; Accounts receivable $50,000; Accumulated depreciation xtures and ttings $5,000; Advertising expense $1,500; Capital $160,400; Cash at bank $100,000; Cost of sales $132,000; Depreciation expense xtures and ttings $2,500: Fixtures and ttings $12,000; Inventory $40,000; Land $25,000; Loan payable $20,000; Prepaid rent $ 1,200; Rent expense $3,800; Repairs expense $9,900; Sales revenue $172,500; Unearned revenue $3,500. Calculate the following items that would appear in the Income Statement for the period ended 31 March. SHOW ALL WORKINGS and include the name of the accounts. Gross Prot Net Profit