(a) What is depreciation?

(b) What information do you require to determine the amount of the cost of an asset to be regarded as depreciation in an accounting period?

(c) If a vehicle costing £30,000 is expected to be used for four years and to be sold as scrap for £6,000 at the end of the four years, how much depreciation will be expensed in its first year of use, applying the straight-line method for the measurement?

(d) John acquired a car for £20,000 and uses it to provide a taxi service. He reports his profit in the first year as £21,800 without depreciating his vehicle. Why do you think he should depreciate his vehicle?