Use the following information to answer this question An asset was bought on 1st January, 1992 for N20,000. Depreciation was provided for annually at 20% on...

The asset was bought on 1st January, 1992 for N20,000. The depreciation rate is 20% per annum on cost, so the annual depreciation charge would be N4,000. The asset was sold on 1st July, 1995, so it was used for 3 years and 6 months, or 3.5 years. The total depreciation charged would be N4,000 x 3.5 = N14,000. The book value of the asset at the time of sale would be N20,000 - N14,000 = N6,000. The selling price of the asset was N7,000, so the profit on the sale would be N7,000 - N6,000 = N1,000. Therefore, the profit on the sale was N1,000. Option (E) is the correct answer.