Sohail Runs a Delivery Business Which Charges a Premium Compared

Multiple Choice

Sohail runs a delivery business which charges a premium compared with its competitors because it offers a very fast and efficient service.He keeps delivery vans for 2½ years only, in order to ensure high levels of reliability.He estimates, on the basis of past experience, that the residual value of his vans is 45% of their cost price.He depreciates each van over the 2½ year period of ownership on the straight-line basis, calculating depreciation for each full month of ownership. Sohail buys a new van on 17 July 20X1 for £17 260.What is the charge for depreciation in respect of this van for inclusion in Sohail's statement of profit or loss for the year ended 31 October 20X1 (to the nearest £) ?

A) £777
B) £1266
C) £949
D) £1726