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WAEC Financial Accounting 2001 Question 33

Question 33

Depreciation

Jeng Limited disposed a fixed asset in 1999 for N2,000. The asset was purchased in 1996 at a cost of N10,000 and has been depreciated at the rate of 20% per annum using the straight line method.
What was the book value when the asset was sold?

  1. A.N8,000
  2. B.N6,000
  3. C.N4,000
  4. D.N2,000
Show the answer and explanation

Answer: C (N4,000)

Explanation

Depreciation 2,000 a year for 1996, 1997 and 1998 = 6,000; book value 10,000 − 6,000 = N4,000.