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WAEC Financial Accounting 1997 Question 13

Question 13

Depreciation

An asset was bought on 1st January, 1992 for N20,000. Depreciation was provided for annually at 20% on cost. It was sold for N7,000 on 1st July, 1995.
The net book value at the time of sale was

  1. A.N16,000
  2. B.N14,000
  3. C.N12,000
  4. D.N8,000
  5. E.N6,000.
Show the answer and explanation

Answer: E (N6,000.)

Explanation

Depreciation is N4,000 a year for 3½ years = N14,000, so NBV = 20,000 − 14,000 = N6,000.