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WAEC Financial Accounting 2000 Question 34

Question 34

Depreciation

A motor vehicle bought for N16,000 was estimated to have a useful life span of 4 years and a scrap value of N2,000.
What is the net book value of the motor vehicle at the end of the third year, using the straight line method?

  1. A.N9,000
  2. B.N5,500
  3. C.N3,500
  4. D.N2,000.
Show the answer and explanation

Answer: B (N5,500)

Explanation

Yearly depreciation (16,000 − 2,000) ÷ 4 = 3,500; after 3 years 10,500, so NBV = N5,500.