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JAMB Principles of Accounts 2007 Question 27

Question 27

Depreciation

An asset was purchased for ₦343 m in 2003. The estimated life of the asset was 3 years with a residual value of ₦28 m.
Using the straight-line method, the depreciation of the asset in the first year was

  1. A.₦210 m
  2. B.₦343 m
  3. C.₦105 m
  4. D.₦270 m.
Show the answer and explanation

Answer: C (₦105 m)

Explanation

(343 − 28) ÷ 3 = ₦105 m a year.