Ahmed has a vehicle breakdown recovery business. He owns a recovery vehicle and has provided the following information about the vehicle: • Purchase date: 1 October 2021 • Purchase price: $80000 paid by bank transfer • Estimated residual value: $30000 • Estimated working life: 5 years Ahmed provides a full year's depreciation in the year of purchase but charges no depreciation in the year of disposal. He depreciates his vehicles using the reducing balance method at 20% per annum. His recovery vehicle is now 4 years old and is no longer reliable. Ahmed considered replacing his recovery vehicle on 31 August 2025. Ahmed's financial year ends on 30 April. REQUIRED

1. (a)Calculate the depreciation charge for each year of the recovery vehicle's working life, assuming Ahmed replaces the recovery vehicle on 31 August 2025. Show your workings.[4]
2. (b)State one advantage and one disadvantage of the reducing balance method of depreciation.[2]
3. (c)On 1 February 2025, a local dealer offered to buy the recovery vehicle from Ahmed for $35000 cash. REQUIRED Calculate the profit or loss on disposal if Ahmed had sold his recovery vehicle to the local dealer on 1 February 2025. Show your workings, and state whether it would have been a 'profit' or 'loss'.[3]
4. (d)(i)Prepare Ahmed's motor vehicles account for the year ended 30 April 2025 if Ahmed had sold his recovery vehicle to the local dealer on 1 February 2025.[2]
5. (d)(ii)Prepare Ahmed's disposal of motor vehicles account for the year ended 30 April 2025 if Ahmed had sold his recovery vehicle to the local dealer on 1 February 2025.[4]
6. (e)Ahmed sold his recovery vehicle. Since the sale, he has been hiring a recovery vehicle capable of recovering larger vehicles and is now considering buying a similar vehicle. He would finance the purchase of this new vehicle using the money received from selling his old recovery vehicle, and the balance will come from a bank loan repayable in 5 years. Delivery of the new vehicle is estimated to be in 6 months. REQUIRED Advise Ahmed whether he should buy this new recovery vehicle. Justify your answer by providing advantages and disadvantages of buying the new recovery vehicle.[5]