On 1 March 2022, David's consulting services purchased a new car for $80 500, which included annual registration costs of $500. 

He paid an additional $1 000 to a sign writer to paint his name along the side of the car. 

On 15 August, the first car service was done and David paid $300 based on the purchase agreement. 

Required:

1. Calculate the cost of the new car.

2. Your friend has just completed the first year of operating her courier business. She explains to you that because of global and national shortage of industrial materials, she could sell her van for more than what she paid for it a year ago. She decides not to depreciate the van for the first year of its operation. With reference to the concept of depreciation, explain whether your friend's thinking is correct.