Question

ule uue te. You may begin this assignment and Wong and there is no time limit. There is no limit on the number of attempts. Your highest This test allows multiple attempts. ultiple tempts rce mpletion This test can be saved and resumed later. Question Completion Status: → Moving to another question will save this response. Question 1 of 9 estion 1 2 points Save Answer Royal Dutch Shell PLC (RDS) is a large, multinational oil company. Its wholly owned subsidiary, the Shell Oil Company, is preparing to purchase a semi-submersible oil rig for $15 million. Additionally, it is going to cost $1.5 million to move the oil rig to the Mars oil-field and secure it in location. While preparing the oil field for production, an additional $2.5 million dollars will be spent on research, geological Surveys, and training. If this acquisition is going to be depreciated over five years using straight-line depreciation, what are the yearly depreciation expenses in this case? a $3.8 million b. $3.3 million c $2.7 million d. $3.0 million e $4.5 million Question 1 of 9 > Moving to another question will save this response.

Answer 1

Solution We know that, Cost of asset include all cost untill that asset is put to use. Cost of asset = Purchase Price + Cost of moving + Cost while preparing asset for production 15 + 1.5 + 2.5 19 Depriciation Cost of asset Life 19 19 5 3.8 = Million Hence, yearly depreciation expense shall be $ 3.8 Million