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WAEC Financial Accounting 2023 Question 16

Question 16

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 value of the asset at the end of the first year is

  1. A.₦8,000.
  2. B.₦5,000.
  3. C.₦3,000.
  4. D.₦2,000.
Show the answer and explanation

Answer: A (₦8,000.)

Explanation

First-year charge = 10,000 × 4/10 = 4,000; 12,000 − 4,000 = ₦8,000.