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WAEC Financial Accounting 2023 Question 15

Question 15

Depreciation

Use the following information to answer questions 15 and 16.
Sammy acquired plant and machinery costing ₦12,000 with an estimated useful life of 4 years and residual value of ₦2,000. The sum of the years digits method is used.
The depreciation to be charged for the third year will be

  1. A.₦4,000.
  2. B.₦3,000.
  3. C.₦2,000.
  4. D.₦1,000.
Show the answer and explanation

Answer: C (₦2,000.)

Explanation

Depreciable amount 10,000; digits 4+3+2+1 = 10; year 3 uses 2/10, so 10,000 × 2/10 = ₦2,000.