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JAMB Principles of Accounts 2007 Question 28

Question 28

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.
What was the asset value at the beginning of the third year?

  1. A.₦63 m
  2. B.₦133 m
  3. C.₦36 m
  4. D.₦28 m.
Show the answer and explanation

Answer: B (₦133 m)

Explanation

Two years of depreciation have been charged by the start of year 3: 343 − 2 × 105 = ₦133 m.