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Zorluk: KolayAdjustments for Depreciation of Fixed Assets

A sole trader's trial balance extracts show Motor Vehicles at a cost of ₦800,000\text{₦}800,000. If depreciation is to be charged at 15%15\% per annum on cost, what is the depreciation expense to be debited to the Profit and Loss Account for the year?

  1. ₦120,000Cevap
  2. B
    ₦680,000
  3. C
    ₦800,000
  4. D
    ₦12,000

Cevap

₦120,000
Under the straight-line method, the annual depreciation expense is calculated by multiplying the specified depreciation rate by the asset's original cost: 15%×₦800,000=₦120,00015\% \times \text{₦}800,000 = \text{₦}120,000. This amount is debited to the Profit and Loss Account as an expense.

Adım Adım Çözüm

1
Identify the depreciation method and rates given in the problem statement.
Method: Straight-line (on cost), Cost = ₦800,000\text{₦}800,000, Rate = 15%15\%.
The straight-line method calculates depreciation as a fixed percentage of the asset's original cost.
2
Compute the annual depreciation expense to be charged to the Profit and Loss Account.
Depreciation=15%×₦800,000=₦120,000\text{Depreciation} = 15\% \times \text{₦}800,000 = \text{₦}120,000.
This is the annual charge reflecting the wear and tear of the fixed asset for the current period.

Anahtar Kavram

Straight-line method of depreciation adjustment in final accounts
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Konular

Adjustments for Depreciation of Fixed Assets

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