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WAEC Financial Accounting 2017 Question 19

Question 19

Depreciation

An organization purchased an equipment for GH¢112,000. It is expected to be used for 6 years then sold for GH¢16,000. What is the annual amount of depreciation, if the straight-line method is used?

  1. A.GH¢16,000
  2. B.GH¢15,000
  3. C.GH¢12,800
  4. D.GH¢12,000
Show the answer and explanation

Answer: A (GH¢16,000)

Explanation

(112,000 - 16,000) ÷ 6 = GH¢16,000 a year.