Varsini Transport delivers goods nationwide. The following information relates to the delivery vehicles owned by Varsini Transport.

Varsini Transport has the following depreciation policy:
• Delivery vehicles are depreciated at the rate of 20% per annum using the straight line method • Depreciation is charged on delivery vehicles purchased and sold during the year on a pro rata basis according to the months of ownership • All sales of delivery vehicles are recorded through a disposal account • All payments and receipts for delivery vehicles are by cheque Required:

(a) Calculate the depreciation charged on delivery vehicles in each of the years ending 31 March 2023 and 31 March 2024.

(b) Prepare for the years ended 31 March 2023 and 31 March 2024 the:
(i) Delivery Vehicles at Cost Account (ii) Accumulated Depreciation of Delivery Vehicles Account.
Varsini Transport had the following costs in the year ended 31 March 2024:
1 Writing the sign of the business on new delivery vehicles 2 Replacement tyres 3 Installing satellite navigation into each delivery vehicle

(c) Identify whether each of the costs above is capital expenditure or revenue expenditure. State the reason for your answer.

(d) Evaluate the suitability of the straight line method when depreciating delivery vehicles.

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1 April 2021 1 July 2022 1 April 2023 30 June 2023 Purchased delivery vehicle A 20,000 Purchased delivery vehicle B 18,000 Purchased delivery vehicle C 25,000 Purchased delivery vehicle D for 28,000 giving delivery vehicle A in part exchange