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Assignment III a. Snatch Ltd bought new equipment on July 1, 2010 for $300,000. The estimated residual value was $50,000. It cost the company an additional $100,000 to transport to equipment to its factory in Hogwards City and to install the equipment in the factory. b. The useful life of the equipment was 5 years. c. The equipment was sold on August 15, 2015. d. The company's accounting year runs from July 1 to June 30. You are required to: a. Calculate the annual depreciation expense for each year, using the straight-line method of depreciation. (Pay careful attention to the dates.) b. The Net Book Value of the equipment at the end of each year c. The gain or loss on disposal (sale) of the equipment if it was sold for: i. $35000 ii. $70,000 d. Is a gain or loss on disposal of fixed assets a real trading gain or loss? You are required to explain the true nature of such gains or losses. e. Explain (with examples) the difference between Capital Expenditure (CAPEX) and Operating Expenditure (OPEX). Operating Expenditure is also referred to as Revenue Expenditure. f. Explain why recognizing when an expenditure is to be classified as Repairs and Maintenance or as a fixed asset is important to financial reporting. Your answer must: i. Set out the basis on which the distinction is to be made, giving examples to illustrate your answer as to when an expenditure is to be treated as one or the other ii. Explain the impact on the Balance Sheet and/or Income statement of wrongly classifying such expenditure, using simple numerical examples. iii. Explain the fundamental accounting concept/principle that governs the financial reporting treatment of the expenditure in

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