Alhaji Musa purchased a motor vehicle for ₦2,400,000 which has a useful life of 4 years with no residual value. If the straight-line method of depreciation is applied, what is the net book value of the vehicle at the end of the second year?

Annual depreciation = ₦2,400,000 ÷ 4 = ₦600,000. After two years, accumulated depreciation = 2 × ₦600,000 = ₦1,200,000. Net book value = ₦2,400,000 − ₦1,200,000 = ₦1,200,000. This question tests the prudence and going concern concepts applied through depreciation.