Neco 2022 Financial Accounting Question 6
Practice objective / multiple choice question 6 from the 2022 Neco Financial Accounting examination.
Machine A was purchased for ₦500,000 and is expected to have a residual value of ₦50,000 at the end of its useful life. Under the straight‑line method the annual depreciation charge is \((\text{Cost} - \text{Residual})/n\) where \(n\) is the useful life in years. Under the reducing‑balance method a constant rate of 20 % is applied to the book value at the start of each year. It is given that the accumulated depreciation after 5 years using the straight‑line method equals the accumulated depreciation after 3 years using the reducing‑balance method. Determine the useful life \(n\) of the machine (in years), giving your answer correct to two decimal places.
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About This Question
This is Neco 2022 Financial Accounting Question 6. It is one of the objective questions from the 2022 Neco Financial Accounting examination.
Difficulty level: Medium .
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