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

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