Virginia runs a business which supplies food for office parties and similar functions. Food is delivered to the client’s premises in vans which have been specially adapted to take shallow trays of...

is delivered to the client’s premises in vans which have been specially adapted to take shallow trays of food and which contain brackets for microwave ovens. The basic cost of a new van is £9570. When a new van is purchased Virginia sends it away for modification which costs a further £1830. On 15th August 2012 two new vans return with the modifications complete, and Virginia puts them straight into service. Virginia expects to keep the vans for a period of 6 years. They are subject to severe wear and tear during their useful lives and she does not expect to get more than scrap value for them after 6 years.

Therefore, she assumes a residual value of nil.

Virginia’s accounting year-end is 31 December. She charges depreciation on a straight-line basis. In the year of acquisition and disposal of non-current assets she charges depreciation for every full month of ownership in the accounting year. The depreciation charge (to the nearest £) for the two new vans in the year ending 31 December 2012 is:

a) £1 267

b) £1 063

c) £1 329

d) £1 583