Reference no: EM133118710

Question - Energee Malaysia Berhad (EMB) bought a prototype robot nicknamed Greenachine from Malaysian Robotics Institute (RobI) in November 2021. EMB paid a purchase price of RM 1 million for Greenachine. Greenachine is being used on a trial basis to harness energy from living trees and leaves to generate clean green energy. Producing such renewable energy will also preserve Malaysia's rainforests. Even though Greenachine is a prototype, it managed to generate double the energy compared to the previous energy source. This energy is supplied to the customers of EMB.

Greenachine has been programmed by RobI to be a self-repairing robot hence is expected to have a long useful-life of over 20 years. However, Greenachine will only be tested for 5 years and the design of the actual robots will be improved based on the trial tests of Greenachine. Based on the terms of the contract, at the end of the 5-year testing period, EMB has to sell back Greenachine to RobI at the price of RM 500.

Required -

(a) Considering that it is a self-repairing robot, should Energee Malaysia Berhad (EMB) depreciate:

i. The prototype, Greenachine

ii. The actual robot once developed and used by EMB

Provide a strong justification to support each of your opinions above.

(b) Calculate or state the net book value of Greenachine for the financial year-ended 31 December 2021 of Energee Malaysia Berhad (EMB). Provide your justification through calculations or explanation.