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WAEC Financial Accounting 2022 Question 18

Question 18

Depreciation

Use the following information to answer questions 17 to 19
Kako Ltd bought a machine for D 1,200,000 on 1st January 2018. Depreciation was provided annually at a rate of 10% using the diminishing balance method. The machine was sold for D 880,000 on 31st December 2021.
The net book value of the machine in the balance sheet as at 31st December 2020 was

  1. A.D 1,080,000
  2. B.D 972,000
  3. C.D 874,800
  4. D.D 787,320
Show the answer and explanation

Answer: C (D 874,800)

Explanation

After three years: 1,200,000 × 0.9 × 0.9 × 0.9 = D 874,800.