The following information relates to the machines of Crosby Packing. 1 January 2014 Purchased Machine A for $12 000 30 September 2015 Purchased Machine B for $16 000 30 June 2016 Disposed of Machine A and received a cheque for $7500. Crosby Packing's depreciation policy is as follows: (i) Machines are depreciated at the rate of 20% per annum using the straight-line method. (ii) Depreciation charge in the year of purchase or sale is based on months of ownership. REQUIRED

1. (a)State two advantages of the straight-line method. 1 2[2]
2. (b)Complete the table to show the depreciation charged in each of the two years ended 31 December 2015 and 31 December 2016. Year ended Machine A $ Machine B $ Total for year $ 31 December 2015 31 December 2016 Workings:[4]
3. (c)Prepare the provision for depreciation of machinery account for the years ended 31 December 2015 and 31 December 2016. Start with the total depreciation on 1 January 2015. Balance the account at the end of each year and bring down the balance on 1 January. Provision for depreciation of machinery account Date Details $ Date Details $[6]
4. (d)Prepare the disposal account. Disposal account Date Details $ Date Details $[3]
5. (e)Explain the term 'revenue receipt'.[2]
6. (f)Complete the table by placing a tick (✔) to show whether each of the following is capital expenditure, revenue expenditure, capital receipt or revenue receipt. Capital expenditure Revenue expenditure Capital receipt Revenue receipt 1. Received a cheque on sale of machine 2. Replaced broken machine part 3. Installed a machine[3]