QUESTIC On 31 December 2018 the following extract was taken from the balance sheet of BBD. Cost NBV Non-current assets K K Accumulated depreciation K 24 000 5 600 29 600 Equipment Office Computers Total 60 000 8 000 68 000 36 000 2 400 38 400 The following transactions took place during the year ended 31 December 2019: 1. On 31 May 2019, equipment purchased on 1 August 2016, at a cost of K28 000, was sold for 10 000. Payment was received by cheque. 2. On 1 June 2019, new equipment was purchased at a cost of K35 000. 3. On 20 June 2019, office computers were purchased for K600. BBD has the following depreciation policy Equipment is depreciated at the rate of 20% per annum using the straight-line method Office computers are depreciated at the rate of 25% per annum using the diminishing (reducing) balance method, A full year's depreciation is charged on equipment and office computers in the year of purchase No depreciation is charged on equipment in the year of sale. Required: (a) Explain the term depreciation. [2 Marks] (b) State four causes of depreciation. [4 Marks] (c) State the advantages of using the straight-line method of depreciation [4 Marks] (d) Prepare the following ledger accounts for the year ended 31 December 2019: 0 Provision for depreciation of equipment account [4 Marks) (ii) Equipment disposal account [4 Marks) (e) Calculate the Net Book Value (NBV) of Equipment and Office Computers as at 31 December 2019. [6 Marks) [Total: 25 Marks]