Question on: JAMB Accounting - 2024
An equipment costing #9,000 has an estimated residual value of #900, and is depreciated at 10% per annum. What is the depreciation charge for the three years using diminishing balance method?
A
#990
B
#900
C
#729
D
#810
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Correct Option: C
Using the diminishing balance method:
Year 1:
Depreciation = 9,000 × 10% = 900
Book value = 9,000 − 900 = 8,100
Year 2:
Depreciation = 8,100 × 10% = 810
Book value = 8,100 − 810 = 7,290
Year 3:
Depreciation = 7,290 × 10% = 729
Depreciation charge for the third year = 729
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