What is the net amount that will be charged

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Question - ABC Limited is a broadband provider which receives government assistance to provide broadband to remote areas. ABC Invested in a new server at a gross cost of $800,000 on 1 October 2012. The server has an estimated life of ten years with a residual value equal to 15% of its gross cost. SUPERFlow uses straight-line depreciation on a time apportioned basis.

The company received a government grant of 30% of its cost price of the server at the time of purchase. The terms of the grant are that if the company retains the asset for four years or more, then no repayment liability will be incurred. SUPERFlow has no intention of disposing of the server within the first four years. SuperFlow's accounting policy for capital-based government grants is to treat them as deferred credits and release them to income over the life of the asset to which they relate.

What is the net amount that will be charged to operating expenses in respect of the server for the year ended 31 March 2013?

A. $22,000

B. $34.000

C. $28,000

D. $10,000

Reference no: EM133012203

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