WAEC Agriculture 2012 Paper

Concept:Annual depreciation equals the cost price minus salvage value, divided by the useful life of the asset.Explanation:Let the cost price be $C$.Given: salvage value $= N500{,}000.00$, useful life $= 10$ years, annual depreciation $= N400{,}000.00$.Using the depreciation formula:$$\text{Annual depreciation} = \frac{\text{Cost price} - \text{Salvage value}}{\text{Useful life}}$$Substitute the given values:$$400{,}000 = \frac{C - 500{,}000}{10}$$Multiply both sides by $10$:$$C - 500{,}000 = 4{,}000{,}000$$Add $500{,}000$ to both sides:$$C = 4{,}500{,}000$$Answer:The cost price of the farm equipment is N4,500,000.00.