Q-2: Blue Company acquired a plant on January 1, 2012, for 32,500. Freight to the point where it was set up was 200, and 500 was expended to install it. The Plant's useful life was estimated at 10 years, with a residual value of 3,500. On January 1, 2013, an essential part of the Plant is replaced, at a cost of 3,000, with one designed to reduce the cost of operating the Plant. The book value of the old part is estimated to be zero. On January 1, 2016, the company buys a new Plant of greater capacity for 37,500, delivered trading in the old Plant which has a fair value and trade-in allowance of 20,000. To prepare the old Plant for removal from the plant cost 75, and expenditures to install the new one were 1,500. It is estimated that the new Plant has a useful life of 10 years, with a residual value of 4,000 at the end of that time. Required: a) Calculate annual depreciation for the year 2012 b) Calculate the gain or loss on the replacement of old Plant. c) Assuming that depreciation is to be computed on the straight-line basis, compute the annual depreciation on the new equipment that should be provided for the fiscal year beginning January 1, 2016