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WAEC Financial Accounting 2006 Question 38

Question 38

Depreciation

Motor vehicles (at cost) 1/1/2002 N1,000,000
Addition to motor vehicles 1/7/2003 N600,000
Depreciation rate 10%
Using the straight line method, the depreciation charged for year 2002 was

  1. A.N160,000
  2. B.N130,000
  3. C.N100,000
  4. D.N60,000
Show the answer and explanation

Answer: C (N100,000)

Explanation

In 2002 only the original vehicles were owned: 10% × 1,000,000 = N100,000.