Question 2 Williams Ltd purchased a new vehicle on 1 July 2017. The vehicle cost is $57,000 and the vehicle needed to be fitted with a hoist costing $3,000 to make it useful for the business. With the new fit out, it was estimated that the vehicle would have a useful life of eight (8) years and a salvage value $8,000. Required: a. What would be the amount of accumulated depreciation and the carrying value of the vehicle at the 30 June 2021, if we were to use the straight-line depreciation method? [2 marks] b. On 1 July 2021 Williams Ltd was approached by a car salesperson who offered to purchase the vehicle for $28,000. Should Williams Ltd accept this offer? Give reasons for your answer. [1 mark] c. The car salesman comes back with a new offer of $12,000 in cash and a $24,000 replacement vehicle. The replacement vehicle is 3 years old and was originally purchased for $60,000 in June 2018. It has an estimated useful life of 5 years and $0 scrap value. Should Williams Ltd accept this offer? Give reasons for your answer. [2 marks] d. If Williams Ltd decided to accept the offer in (c) where would the transaction be recorded? Give reasons for your answer. [2 marks] e. Into which of the three components of the statement of cash flows would the sale of the vehicle be allocated? [1 mark] f. The CEO of Williams Ltd believes that depreciation is a result of the fall in the market value of the vehicle and needs to be included on the balance sheet. Explain to the CEO how depreciation arises and why it is required to be included on the income statement. [2 marks] [Total for Question 2 = 10 marks]