A Sole Trader Owns a Company Vehicle Which Cost £10,000

question 11

Multiple Choice

A Sole Trader owns a company vehicle which cost £10,000 at the beginning of year 1,and is depreciated at 25% reducing balance method.In year 2,the end of year accounts are being drawn up.Which of the following is the correct adjustment for the depreciation of the vehicle?

• A) Annual Depreciation charge of £2,500 shown in the income Statement. On the Statement of Financial Position, the Carrying Amount of the vehicle is £7,500
• B) Annual Depreciation charge of £2,500 shown in the income Statement. On the Statement of Financial Position, the Carrying Amount of the vehicle is £5,000
• C) Annual Depreciation charge of £4,375 shown in the income Statement. On the Statement of Financial Position, the Carrying Amount of the vehicle is £5,625
• D) Annual Depreciation charge of £1,875 shown in the Income Statement. On the Statement of Financial Position, the Carrying Amount of the vehicle is £5,625