Use the information below to answer question An asset was purchase for ₦343m in 2003. The estimated life of the asset was 3 years with a residual value of ₦...
Question 1 Report
Use the information below to answer question An asset was purchase for ₦343m in 2003.
The estimated life of the asset was 3 years with a residual value of ₦28m.Using the straight method. The depreciation of the asset in the first year was?
Answer Details
To calculate the depreciation of an asset using the straight-line method, you subtract the residual value from the initial cost and divide the result by the estimated life of the asset in years.
So, for this asset:
- The initial cost was ₦343m
- The estimated life of the asset was 3 years
- The residual value was ₦28m
Subtracting the residual value from the initial cost gives:
₦343m - ₦28m = ₦315m
Dividing ₦315m by the estimated life of the asset gives us:
₦315m / 3 years = ₦105m per year
Therefore, the depreciation of the asset in the first year using the straight-line method is ₦105m.
So, the correct answer is option C: ₦105m.
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