WAEC Accounting 2020 Objective — Question 41

Question 41 of 50 from the West African Examinations Council (WAEC) Accounting 2020 Objective paper, with the correct answer and a full explanation.

A computer set bought for N150,000 was disposed for N45,000 after some years of use. Accumulated depreciation at the time of disposal was N7,500. The profit on disposal was

A. N112,500
B. N105,000
C. N97,500
D. N37,500Correct

Explanation

If profit is made on disposal of an asset, it indicates the asset is sold above its net worth. Thus, net worth (NBV) of the computer = N45,000-N7,500 = N37,500. Accumulated depreciation = cost - the net book value: N150,000-N112,500=N37,500 (net worth as the profit figure works out to N37,500).

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