What should be the net book value of the vehicle as at 31st December 2003?

Motor Vehicle Account as at 31st December 2001.
Debit:
Jan. 1, cost …………….N1950 000
Dec.31, Addition ………… N400 000
Credit:
Jan. 1, Depreciation ……..N1360 000
June 30, Sales proceeds…… N700 000
The vehicle sold was purchase on January 1, 1998 at a cost of N1,000 000 and had depreciation at 25% on cost.

Assuming that depreciation is charged on the addition of the year at the rate of 15% on reducing balance, what should be the net book value of the vehicle as at 31st December 2003?

A. N280,000
B. N289,000
C. N250,000
D. N340,000

Correct Answer:

Option C – N250,000