JAMB Accounting 2019 Objective — Question 20
Question 20 of 40 from the Joint Admissions and Matriculation Board (JAMB) Accounting 2019 Objective paper, with the correct answer and a full explanation.
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Use the information below to answer these questions. Motor Vehicle Account as at 31st December, 2001. Debit: January 1, Cost ₦1,950,000; Dec. 1, Depreciation ₦4,000,000. Credit: Jan. 1, Depreciation ₦1,360,000; June 30, Sales Proceeds ₦700,000. The vehicle sold was purchased on January 1, 1998 at a cost of ₦1,000,000 and had depreciation at 25% on cost. Assuming that depreciation is charged on the addition of the year at the rate of 15% on reducing balance, what should be the net book value of the vehicle as at 31st December, 2003?
- A. ₦111,000Correct
- B. ₦280,000
- C. ₦289,000
- D. ₦340,000
Explanation
Depreciation per annum = 15% × 1,950,000 = ₦292,500. Number of years = 6. Total depreciation = 6×292,500 = ₦1,755,000. NBV as at 31 Dec 2003 = 1,950,000−1,755,000 = ₦195,000. (Note: computed NBV is ₦195,000; the source's stated answer letter is A, corresponding to option ₦111,000 — flagged as a possible key/computation inconsistency in the source.)
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