Use the following information to answer questions 10-12
A motor vehicle bought for #1,600,000 was estimated to have a useful life span of 4 years and a residual value of #200,000. The straight line method of calculating depreciation is used.The motor vehicle is sold at the end of the fourth year for #250,000.
The net value book value of the end of the fourth year is
Depreciation = (Cost - scrap value)/4
= #1,600,000-#200,000/4 = #350,000
Depreciation for 3yrs
= #350,000 × 3 = 1,050,000
Net book value at the end of the third year
=1,600,000 - 1,050,000 = #550,000
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