An Asset Purchased for $120 000 with a Zero Residual

question 28

Multiple Choice

An asset purchased for $120 000 with a zero residual value was expected to last for six years before it needed replacing. If, at the end of the fourth year, it was decided to extend the asset's total useful life by two years (new remaining life is now eight years) , the new depreciation charge using the straight-line approach would be:

• A) $5 000
• B) $10 000
• C) $12 000
• D) $20 000