An Asset Bought for $147 000 with a Zero Residual

question 18

Multiple Choice

An asset bought for $147 000 with a zero residual value was expected to last for seven years before it needed replacing. If at the end of the third year it was decided to extend its total useful life by four years (new remaining life is now eight years) , calculate the new depreciation charge using the straight-line approach.

• A) $10 225
• B) $10 500
• C) $13 364
• D) $21 000

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Definitions:

Commission

A fee paid to an agent or employee for transacting a piece of business or performing a service, often a percentage of the transaction.

Appliances

Electrical or mechanical machines that perform domestic functions, such as refrigerators or washing machines.

Net Proceeds

The final amount of money received from a transaction after deducting all associated costs and expenses.

Commission

A fee paid to an agent or employee for transacting a piece of business or performing a service, typically a percentage of the sales or services sold.