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WAEC Financial Accounting 2004 Question 44

Question 44

Depreciation

Purchase price of equipment N60,000
Freight and installation cost N10,000
Annual maintenance cost N1,000
Estimated useful life – 5 years
Estimated scrap value N2,000
What is the total acquisition cost of the equipment?

  1. A.N76,000
  2. B.N72,000
  3. C.N70,000
  4. D.N60,000
Show the answer and explanation

Answer: C (N70,000)

Explanation

60,000 + 10,000 = N70,000; maintenance is a revenue expense.