An asset was bought on 1st January, 1995 for N60,000. Depreciation was provided for annually at 20% on cost. It was sold for N21,000 on 30th October 1998. D...
Question 1 Report
An asset was bought on 1st January, 1995 for N60,000. Depreciation was provided for annually at 20% on cost. It was sold for N21,000 on 30th October 1998. Depreciation is charged fully in the year of disposal. Accumulated depreciation is
Answer Details
Accumulated depreciation is the total amount of depreciation charged on an asset since it was acquired.
Using the straight-line method, the annual depreciation charged on the asset is 20% of N60,000 which is N12,000. So, from 1st January, 1995 to 31st December, 1997 (3 years), the accumulated depreciation will be N12,000 x 3 = N36,000.
Since depreciation is charged fully in the year of disposal, the accumulated depreciation for the period from 1st January, 1998 to 30th October, 1998 will be 20% of N60,000 which is N12,000.
Therefore, the total accumulated depreciation will be N36,000 + N12,000 = N48,000.
Hence, the answer is N48,000.
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