Question $2$

A$.$ On January $1,2004,$ Khai Lee bought two Motor Van on credit from Elite Lifestyle for $$20000$ each. Depreciation is charged at a rate of $10\%$ per annum using the reducing balance method. The business' policy is to charge a full year's depreciation in the year of purchases but not charge any in the year of sale.

One of the motor van was sold for $$13000$ cash on June $30,2006.$ On that same date, another Motor Van costing $$24000$ was bought for cash.

Required:

i$.$ Prepare the Motor Van Account for $2004,2005$ and $2006$

$(9$ marks$)$

ii$.$ Prepare the Motor Van Disposal Account for $2006$

$(8$ marks$)$

iii. Prepare the Provision for Depreciation Account for $2004,2005,2006(9$ marks$)$

iv$.$ Explain the accounting concept prudence and state how it is applicable when provided for depreciation.

$(3$ marks$)$

$($Total $30$ marks$)$