What will be the net book value of component

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Question - Hershon Inc. acquires a new machine. It is comprised of 2 different identifiable components the P922 and the B14. Each of these components is expected to be overhauled at different intervals. The acquisition cost of the entire machine is as follows:

Component P922: $198,000

Component R14: $240,000

Total $438,000

Component P922 is expected to have a useful life of five years and a residual value of $20,000 before the first major overhaul is required. Component R14 is expected to have a useful life of seven years and a residual value of $15,000 before its first overhaul.

Assuming straight-line depreciation, what will be the net book value of component P922 at the end of year five?

Reference no: EM133148683

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