A's Entertainment (AE) A's Entertainment (AE) is a South Korean entertainment company. AE is in the business of music production and a record label for large Korean pop (Kpop) artists. To remain competitive in the Kpop, AE has decided to purchase "Ros," a new music production software with artificial intelligence capabilities. Its accounts are reported in US dollars ($). AE purchased the software on 1 January, 2019 at $580,000. Due to fast changing technology, the expected usefulness of this software is 3 years and its likely residual value is $250,000. The supplier of this software has informed AE that their prevailing industry depreciation rate is 60% per annum. AE uses the straight-line method to depreciate all of its fixed assets. The corporate tax rate is 30%. The CEO is keen to reduce AE's tax liabilities. Selected financial information for AE's profit & loss account for 2019, year ending 31 December Items Sales turnover Cost of goods sold (COGS) General expenses Interest Corporate tax expense ($) 1,250,000 428,000 388,000 65,000 30% of net profit before tax Note the above general expenses do not account for the depreciation expense for the new software. (a) Using the straight-line method of depreciation, calculate the net profit (loss) after interest and tax for the period ending 31 December 2019 (show all your working). [4 marks] (b) Using the reducing/declining balance method of depreciation, calculate the net profit (loss) after interest and tax for the year ending 31 December 2019 (show all your working). [4 marks] (c) Using your results from part (a) and part (b), identify which depreciation method will help AE to reduce its tax liability in 2019. (1 mark] (d) State one limitation of using the reducing/declining balance method of depreciation for AE. [1 mark]