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WAEC Financial Accounting 1994 Question 22

Question 22

Depreciation

A plant which costs ₦1,000 and has a residual value of ₦125 is depreciated at 20% per annum. Using the straight-line method, what is the depreciation charge for the second year?

  1. A.₦128
  2. B.₦140
  3. C.₦160
  4. D.₦175
  5. E.₦200.
Show the answer and explanation

Answer: D (₦175)

Explanation

Straight line on the depreciable amount: 20% × (1,000 − 125) = ₦175 every year.