Pupkewitz Motors bought a delivery vehicle on 1 June 2018 and paid these expenses:

N$

Cost price 232 000

Sign writing 2 900

Tinting of windscreen ad windows 4 860

Seat covers 1 680 Licensing fee 320 Number plates 240

You are required to:

3.1 Calculate the cost of the vehicle. [6 Marks]

3.2 Mention two accounting principles that guides the calculation and reporting of depreciation. [2 Marks]

3.3 Write down the formula to determine the rate of depreciation. [2 Marks]

Rustenburg Ruiters bought s new machine on 1 January 2011 for N$ 22 500. The business estimates the machine to have a useful life of six years, and a residual value at the end of six years of N$ 1 500.

3.4 Find the rate for calculating the reduce balance method using the information above. [4 Marks]

3.5 Calculate the depreciation amount, for each year of the estimated six-year life under the

reduce balance method.

[12 Marks]