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WAEC Financial Accounting 1997 Question 15

Question 15

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 profit on sale was

  1. A.N8,000
  2. B.N7,000
  3. C.N6,000
  4. D.N5,000
  5. E.N1,000.
Show the answer and explanation

Answer: E (N1,000.)

Explanation

Profit on sale = proceeds 7,000 − NBV 6,000 = N1,000.