A motor vehicle bought for N16,000 was estimated to have a useful life span of 4 years and a scrap of N2,000. Using the straight line method, what is the am...

A motor vehicle bought for N16,000 was estimated to have a useful life span of 4 years and a scrap of N2,000. Using the straight line method, what is the amount of depreciation charged per annum?

Answer Details

The straight-line method is a method of calculating depreciation that involves dividing the cost of an asset minus its scrap value by the number of years of its useful life. In this case, the cost of the motor vehicle is N16,000 and the scrap value is N2,000. So the depreciable cost of the asset is N14,000 (N16,000 - N2,000). Using the straight-line method, the amount of depreciation charged per annum is calculated as depreciable cost divided by the useful life of the asset. Therefore, the amount of depreciation charged per annum is N3,500 (N14,000 divided by 4 years). So the answer is N3,500.