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WAEC Financial Accounting 2002 Question 20

Question 20

Depreciation

An asset was bought on 1st January, 1995 for N60,000. Depreciation was provided for annually at 20% on cost. It was sold for N21,000 on 30th October 1998. Depreciation is charged fully in the year of disposal.
Profit on sale is

  1. A.N24,000
  2. B.N21,000
  3. C.N18,000
  4. D.N9,000.
Show the answer and explanation

Answer: D (N9,000.)

Explanation

21,000 − NBV 12,000 = N9,000 profit.