A company purchased a motor vehicle on 1 April 2021 for ₦12,000,000. It is the company's policy to depreciate motor vehicles at 25% per annum on the reducing balance basis, with a full year's charge in the year of acquisition and none in the year of disposal. The vehicle was sold on 15 September 2023 for ₦5,062,500. What is the profit or loss on disposal?

Full year's depreciation is charged in 2021 and 2022; none in 2023 (year of disposal). NBV after year 1 (2021): ₦12,000,000 × 75% = ₦9,000,000. NBV after year 2 (2022): ₦9,000,000 × 75% = ₦6,750,000. NBV after year 3 (2023, no charge): ₦6,750,000 × 75% = ₦5,062,500 — but since no depreciation is charged in the year of disposal, carrying amount at disposal = ₦6,750,000. Proceeds = ₦5,062,500; loss = ₦6,750,000 − ₦5,062,500 = ₦1,687,500. The correct answer is A.