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WAEC Financial Accounting 2004 Question 45

Question 45

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 annual depreciation charge if straight line method is used?

  1. A.N14,000
  2. B.N13,600
  3. C.N12,000
  4. D.N10,000
Show the answer and explanation

Answer: B (N13,600)

Explanation

(70,000 − 2,000) ÷ 5 = N13,600.