What the depreciation charge for the year ended march

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Zebra Ltd, which has an accounting year-end of 31 March 2019, has constructed an oilrig to excavate and access oil underground. It is brought into use on 1 April 2018. The cost of construction is £120 million. The oilrig has an estimated economic life of 10 years. At the end of that life the company is required by law to remove the oilrig and restore the ground. The cost of removal and restoration is estimated at £80 million. The discount factor for 10% (the company's cost of capital) in 15 years is 0.09.

Problem 1: The depreciation charge for the year ended 31 March 2019, to the nearest thousand, will be:

Option A. £15,084,346

Option B. £12,000,000

Option C. £20,000,000

Option D. £19,272,727

Reference no: EM132616601

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