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Assume you are recently appointed as an accountant in a manufacturing firm. Your manager asked you to calculate the depreciation of a machinery which is

Assume you are recently appointed as an accountant in a manufacturing firm. Your manager asked you to calculate the depreciation of a machinery which is expected to give output for the next 12 years. However, the management estimated that the current level of output will be maintained for 7 years after which it is not financially viable to use the machine. Management further believes that a more advance machine will be available in the market in next five years. Identify period that should be used in the determination of depreciation. (Hint: select among 12 years, 7 years and 5 years) [6 marks]

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