WAEC Accounting 2014 Theory — Question 5

Model answer

(i) Lifespan of the asset: This is the estimated useful life that an asset is expected to be in use — one of the major factors considered in determining the depreciation charge. (ii) Scrap (residual) value of the asset: The worth of the asset at scrap/disposal is another factor that determines the depreciation charge. (iii) The cost of the asset: This is the amount the asset costs the business, and is important in determining the annual depreciation charge.