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A 1.5 MVA standby generator set was purchased for P7,500,000. The salvage value is estimated to be P500,000 after 20 years of service life. After 15 years, due to unavoidable circumstances, the generator has to be overhaul for a cost of P1,000,000 but its life was extended by 5 years and the salvage value is reduced to P150,000 after it was overhauled. What is the book value after 20 years using the straight- line method of depreciation?

A 1.5 MVA standby generator set was purchased for P7,500,000. The salvage value is estimated to be P500,000 after 20 years of service life. After 15 years, due to unavoidable circumstances, the generator has to be overhaul for a cost of P1,000,000 but its life was extended by 5 years and the salvage value is reduced to P150,000 after it was overhauled. What is the book value after 20 years using the straight- line method of depreciation?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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A 1.5 MVA standby generator set was purchased for P7,500,000. The salvage value is estimated to be P500,000 after 20 years of service life. After 15 years, due to unavoidable circumstances, the generator has to be overhaul for a cost of P1,000,000 but its life was extended by 5 years and the salvage value is reduced to P150,000 after it was overhauled. What is the book value after 20 years using the straight- line method of depreciation?
Transcribed Image Text:A 1.5 MVA standby generator set was purchased for P7,500,000. The salvage value is estimated to be P500,000 after 20 years of service life. After 15 years, due to unavoidable circumstances, the generator has to be overhaul for a cost of P1,000,000 but its life was extended by 5 years and the salvage value is reduced to P150,000 after it was overhauled. What is the book value after 20 years using the straight- line method of depreciation?
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