Compute how much depreciation did sharpe record in total

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Point 1: On January 1, 20X5, Sharpe Industries Inc. expanded its drainage pond at a cost of $4,250,800. Of this cost, 65% is attributed to the pond and the remaining 35% is attributed to electrical equipment. The pond is expected to have a 22-year useful life and a residual value of $100,000. It will be depreciated on a straight-line basis. The electrical equipment is expected to have an eight-year useful life and a residual value of $50,000. However, the company has determined that the electrical equipment will be depreciated on a declining balance basis using a rate of 15%. The drainage pond includes an obligation to restore the land to its original condition at the end of the pond's 22-year useful life. Sharpe estimates that this obligation will cost $6,500,000 in 22 years. The company uses a discount rate of 8.5% to discount this obligation. Sharpe follows IFRS. It also applies the half-year rule in calculating depreciation in the year of acquisition and in the year of disposal.

Question 1: For its December 31, 20X5, fiscal year end, how much depreciation did Sharpe record in total for the pond, the electrical equipment, and the decommissioning obligation?

Option a) $172,107

Option b) $192,904

Option c) $196,654

Option d) $393,308

Reference no: EM132490856

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