WAEC Accounting 2021 Paper

Concept:Reducing balance depreciation is calculated on the opening net book value, not on the original cost, each year.Explanation:Given: Cost of assets on 01/01/2018 = ₦$600{,}000$. Annual depreciation rate = $15\%$ on reducing balance.Depreciation for the first year (2018) = $15\% \times 600{,}000 = 90{,}000$.So, net book value at 31/12/2018 = $600{,}000 - 90{,}000 = 510{,}000$.The next year’s depreciation charge is calculated on this new net book value.Depreciation for the following year (2019) = $15\% \times 510{,}000 = 76{,}500$.Thus, the required depreciation charge is ₦$76{,}500$.Answer:₦$76{,}500$