Ras Al Kaimah Inc., whose financial year-end is December 31, purchased a new manufacturing equipment on April 1, 2011. The equipment has a special component that requires replacement before the end of the equipments useful life. This equipment was initially recognized in two accounts: one is for the main unit and the other one for the special component. Ras Al Kaimah uses straight-line method of depreciation for all its manufacturing equipment. Depreciation is recorded to the nearest month, residual values being disregarded.

On April 1, 2017, the special component is removed from the main unit and is replaced with similar component. This component is expected to have a residual value of approximately 25% of cost at the end of the main units useful life. Because of its materiality, the residual value will be considered in calculating depreciation. Specific information about this equipment are as follows:

Main Unit
	Purchase price in 2011	187,200.0
	Residual Value	13,200.0
	Estimated Useful Life	10 years
Component 1
	purchase price	30,000.0
	Residual Value	750.0
	Estimated Useful Life	6 years
Component 2
	Purchase price	45,750.0

11. What is the depreciation charge to be recognized for the year 2011?
    1. P17,790 C) P16,706
    2. P23,720 D) P16,800