Carole’s business buys a delivery van on 1 January 2022 for £27,000. She estimates that the van will be used for four years, after which she believes it will have a trade-in value of £5,000. She also predicts that the van will travel a total of 50,000 miles over the course of its four years of use.

The van was actually driven for 15,000 miles during 2022, 11,000 miles in 2023 and 13,000 miles in 2024.

Required:

(a) Calculate the depreciation expense on the van for each of Carole’s financial years ending 31 December 2022, 2023 and 2024 using:

(i) the straight-line method;

(ii) the reducing balance method at a rate of 40% per year;

(iii) the units of production method.

(b) On 1 July 2025, it becomes clear that the van needs some major repairs, so Carole decides to sell it to a garage for a cash price of £2,000. The van had been driven for 7,000 miles during the first six months of 2025. Assuming Carole had adopted the units of production method of depreciation, calculate:

(i) the depreciation expense on the van for the year ended 31 December 2025;

(ii) the profit or loss on disposal of the van.