Use the information below to answer questions . On January 1/2005, a machine was bought for N56,000 to last for five years with a residual value of N1000. t...

Use the information below to answer questions .

On January 1/2005, a machine was bought for N56,000 to last for five years with a residual value of N1000.

the rate of the yearly depreciation expense would be?

Answer Details

To determine the yearly depreciation expense for the machine, we need to calculate the amount of depreciation each year using the straight-line method. This method assumes that the machine will depreciate evenly over the five-year period. The total amount of depreciation over the five years would be N56,000 - N1,000 = N55,000. Therefore, the yearly depreciation expense would be N55,000 ÷ 5 years = N11,000 per year. So the rate of yearly depreciation expense would be N11,000 ÷ N56,000 = 0.1964, which is approximately 20% of the original cost.