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?

Question

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?

Quizplus · Accepted Answer

The Answer of 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?

Kenya LtdAcquires a New Machine