Question

A company depreciate motor vehicle at 5% per annum. What will be the book value at the end of 3 years of a car which was bought at N250,500.00 ? Supposedly the company sells the car for 220,300.00 did it make profit or loss? How much ?​

Answer 1

• 5527.56 profit

Explanation:

Given:

• Initial value = 250500
• Rate of depreciation = 5%
• Time = 3 years

The value of the car after 3 years:

• 250500*(1 - 5/100)³ = 214772.44

The company will make a profit:

• 220300 - 214772.44 = 5527.56