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JAMB Principles of Accounts 2006 Question 2

Question 2

Depreciation

On January 1 2005, a machine was bought for ₦56 000 to last for 5 years with a residual value of ₦1 000.
Calculate the yearly depreciation expense using the straight line method.

  1. A.₦11 000
  2. B.₦11 200
  3. C.₦11 400
  4. D.₦11 300
Show the answer and explanation

Answer: A (₦11 000)

Explanation

Straight line: (cost − residual value) ÷ life = (56 000 − 1 000) ÷ 5 = ₦11 000 a year.