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Question 2 In the year ending 31 December 2018, Happy Ltd bought a newmachine and made the following payments in relation to it:$Cost as per supplier’s list 48,000Discount received from the supplier 4,000Delivery charge 400Installation charge 800Maintenance charge 1,200Additional component to increase capacity 1,600Replacement parts 1,000Required:a Determine and justify the cost which should be used as thebasis for depreciation. b What is depreciation? Why is it necessary? c Explain the term ‘objectivity’ as used by accountants. To whatextent is depreciation objective? d It is common practice in some countries to use the diminishingbalance for machines in the early years of an asset’s life and thenchange to the straight-line method as soon as this would give ahigher annual charge. What do you think of this practice?