Reference no: EM133172257

Question - On 1 January 2012, TJ Corporation acquired a plant from BR Enterprise for $2.4 million. In addition, TJ Corporation also incurred import duties and freight charges amounting to $300,000 as well as an installation cost of the plant of $120,000. The plant is depreciated on a straight-line basis over 20 years. The following subsequent expenditures were incurred by TJ Corporation regarding the plant:

1. Service cost of $54,800 per annum to maintain the plant.

2. $80,000 on 1 January 2016 to replace one of the components that were damaged. The production capacity of the plant remains unchanged. However, the operating costs have significantly reduced after the replacement. The carrying amount of the old component at that date was RM56,000.

3. $220,000 on 31 December 2016 for the purchase of a new component to replace another old component. The production capacity of the plant is expected to increase with the new component in place. The carrying amount of the old component replaced was $136,000 (derecognised)

Required - Calculate the depreciation of the plant to be charged for the year ended 31 December 2016.