The Nepean Factory purchased five robots to perform routine assembly tasks. The robots cost $50,000 each and installation costs for each robot amounted to $10,000. The employees replaced by the robots were transferred to another division. The transferred employees were retrained at a cost to the factory of $12,000 and each employee was paid a $500 relocation bonus. What cost figure should be attached to the five robots? (2 marks)

b) An automobile manufacturer introduces a new car model. Past experience indicates that warranty claims on the new car will probably occur but as the design of the car does not resemble any other models previously on the market, the amount of the warranties cannot be reasonably estimated. Discuss how the manufacturer should record this event in its accounting records, providing evidence to justify your decision. (2 marks) Word limit 100.

c) Your friend has just completed the first year of operating a one-van courier business. She explains to you that because she has taken very good care of the van, she could sell the van for more than what she paid for it a year ago. As a result, she decides not to depreciate the van for the first year of its operation. Explain why your friends thinking is incorrect, referring to the concept of depreciation. (2 marks) Word limit 100