The net book value of the machine in the balance sheet as at 31st December 2020 was?

Use the following information to answer the question below

Kako Ltd bought a machine for D 1,200,000 on 1st January 2018. Depreciation was provided annually at a rate of 10% using the diminishing balance method. The machine was sold for D 880,000 on 31st December 2021.

 

A. D 874,800
B. D 972,000
C. D 1,080,000
D. D 787,320

Correct Answer:

Option A = D 874,800

Explanation

From 2018 to 2021( accounting year) is three (3) years

	D
Cost	1200000
Year 1 ( 10% x 1200000)	120000
	1080000
Year 2 ( 10% x 1080000)	108000
	972000
Year 3 ( 10% x 972000)	97200
Depreciation	874800