Question
A company purchases a specialist piece of machinery for 60,000 at the beginning of year 1.The machinery is depreciated over its useful economic life which
A company purchases a specialist piece of machinery for 60,000 at the beginning of year 1.The machinery is depreciated over its useful economic life which has been estimated at 12 years.At the beginning of year 3 the directors decided to revalue the company's machinery.The cost today of a new asset of similar type would be 20% higher than the original historical cost.At the end of year 3 the accountant calculated the depreciation expense based on the revalued asset cost. At what net book value would the machinery be carried following the revaluation at the beginning of year 3 and accounting for the depreciation for year 3?
a. 64,800 b. 48,000 c. 50,000 d. 60,000 e. 40,000
the correct answer was A, please also explain why
thank you
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