A machine bought for N7,000 was estimated to have a useful life of 4 years and a scrap value of N500. Using the straight line method, what was the amount of...

A machine bought for N7,000 was estimated to have a useful life of 4 years and a scrap value of N500. Using the straight line method, what was the amount of depreciation charged per annum?

Answer Details

To calculate the depreciation charged per annum using the straight-line method, we need to first determine the depreciable cost of the asset. The depreciable cost of the asset is calculated as follows: Depreciable cost = Cost of asset - Scrap value Depreciable cost = N7,000 - N500 Depreciable cost = N6,500 The annual depreciation charge is then calculated as follows: Annual depreciation charge = Depreciable cost / Useful life Annual depreciation charge = N6,500 / 4 years Annual depreciation charge = N1,625 Therefore, the amount of depreciation charged per annum using the straight-line method is N1,625. The correct option is N1,625.