QUESTION 2 David Arumugam is a trader. His financial year ends on 30 September. He purchased the following motor vehicles on credit from Peter Shanker on 1 October 2018. Motor vehicle QAT 135 costing 20,000 Motor vehicle WTU 624 costing 16,000 David Arumugam decided that depreciation should be calculated on motor vehicles owned at 30 September each year at the rate of 25% per annum, using the straight line method. A full year's depreciation should be provided in the year of purchase, but no depreciation should be provided in the year of disposal. On 1 April 2020, David Arumugam decided that only one motor vehicle was required and he sold motor vehicle WTU 624 to Rachel Traders and received cash of 12,500. REQUIRED: (a) (i) Name one accounting principle which is applied when non-current assets are depreciated. [1] (ii) Explain why the accounting principle named in (i) is applied when providing for depreciation of non-current assets. [2] (ii) State two causes of depreciation of non-current asset. [1] (b) Write up the following accounts in David Arumugam's ledger for each of the years ended 30 September 2019 and 30 September 2020: (i) Motor vehicles account Accumulated depreciation for motor vehicles account (iii) Disposal of motor vehicles account [9] (c) Using the answer to (b), state the entries in relation to motor vehicles which will appear in David Arumugam's Statement of Profit or Loss for the year ended 30 September 2020. [2]