Reference no: EM132829597

Problem 1: A company purchases a specialist piece of machinery for £60,000 at the beginning of year 1. The machinery is depreciated over its useful economic life which has been estimated at 12 years. At the beginning of year 3 the directors decided to revalue the company's machinery. The cost today of a new asset of similar type would be 20% higher than the original historical cost. At the end of year 3 the accountant calculated the depreciation expense based on the revalued asset cost. At what net book value would the machinery be carried following the revaluation at the beginning of year 3 and accounting for the depreciation for year 3?

a. £64,800

b. £48,000

c. £50,000

d. £60,000

e. £40,000