A government reported expenditures for infrastructure as follows: $20 million for improvements and additions; $18 million to extend the life of existing infrastructure; $22 million for general repairs. The cost of its infrastructure, excluding land, is $600 million, and the infrastructure has an estimated life of 50 years, on average. Which of the following would be the reported expense in millions under each of the following options?

Question

Quizplus · Accepted Answer

The expense using the depreciation approach is; depreciation expense of $12,000,000 $600,000,000/50 + Repairs of $22,000,000 = $34,000,000. The expense using the modified approach is $18,000,000 to extend the life of existing infrastructure + repairs of $22,000,000 = $40,000,000

A Government Reported Expenditures for Infrastructure as Follows: $20 Million