A bicycle manufacturer amortises, on a straight-line basis over 5 years with no residual value, a right to use a welding process acquired for 400,000. After 2 years, the year-end review shows that the benefits are in fact consumed as frames are welded, which can now be measured reliably: 60,000 units frames remain to be produced with this process. The units of production method is adopted from year 3, during which 18,000 units frames are welded. What is the charge for year 3?
- Cost of the right of use
- 400,000
- Initial useful life
- 5
- Years amortised on a straight-line basis
- 2
- Frames remaining to be produced
- 60,000
- Frames welded during year 3
- 18,000