The municipality acquired a building for $ \text{₦}10{,}000{,}000 $ with a statutory straight‑line depreciation period of 40 years. After 10 years the asset was revalued to $ \text{₦}12{,}000{,}000 $ and the remaining useful life was revised to 30 years. The General Fund had an opening balance of $ \text{₦}5{,}000{,}000 $. During the year the fund recorded revenue of $ \text{₦}3{,}200{,}000 $ and expenses (excluding depreciation) of $ \text{₦}2{,}600{,}000 $. Calculate the depreciation expense for the year and the closing balance of the General Fund at year‑end.

Question

The municipality acquired a building for $ \text{₦}10{,}000{,}000 $ with a statutory straight‑line depreciation period of 40 years. After 10 years the asset was revalued to $ \text{₦}12{,}000{,}000 $ and the remaining useful life was revised to 30 years. The General Fund had an opening balance of $ \text{₦}5{,}000{,}000 $. During the year the fund recorded revenue of $ \text{₦}3{,}200{,}000 $ and expenses (excluding depreciation) of $ \text{₦}2{,}600{,}000 $.  Calculate the depreciation expense for the year and the closing balance of the General Fund at year‑end.

Accepted Answer

Depreciation expense = ₦400,000; Closing fund balance = ₦5,200,000

Gce Model Questions Vol1 2024 Financial Accounting Question 11

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