Kenya LtdAcquires a New Machine

question 36

Multiple Choice

Kenya Ltd.acquires a new machine.It is comprised of two different components (A and B) that are expected to be overhauled at different times.
The acquisition costs of the machine are as follows:
Component A is expected to have a useful life of 5 years and a residual value of $20,000 before the first major overhaul is required.Component B is expected to have a useful life of 7 years and a residual value of $15,000 before its first overhaul.Kenya uses straight-line depreciation for all its equipment.At the beginning of year 6, component A undergoes a major overhaul at a cost of 100,000.The work is expected to extend its life by 3 years, but the residual value will then be zero.What is the net book value of component A one year after the overhaul?

• A)$120,000
• B)$80,000
• C)$66,667
• D)$40,000

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Definitions:

Possessed Mitochondria

Refers to cells that contain mitochondria, the powerhouse organelles responsible for energy production.

Crystalline Rod

A solid material structured in a way that its atoms are arranged in a highly ordered, repeating pattern extending in all three spatial dimensions.

Flagella

Long, slender organelles that protrude from the cell body of certain cells, involved in movement and sensory functions.

Protists

Eukaryotic organisms that are not classified as animals, plants, or fungi, often unicellular or simple multicellular, including amoebas, algae, and protozoa.