January 1, 2022.
The plant and machinery have an estimated useful life of 10 years and a residual value of TZS 2,000,000,000. AMCL uses the straight-line method of depreciation for its assets.
To calculate the annual depreciation expense, we first need to determine the depreciable amount, which is the cost of the asset minus its residual value.
Depreciable amount = Cost of asset - Residual value
Depreciable amount = TZS 20,000,000,000 - TZS 2,000,000,000
Depreciable amount = TZS 18,000,000,000
Next, we calculate the annual depreciation expense by dividing the depreciable amount by the useful life of the asset.
Annual depreciation expense = Depreciable amount / Useful life
Annual depreciation expense = TZS 18,000,000,000 / 10 years
Annual depreciation expense = TZS 1,800,000,000
Therefore, the annual depreciation expense for the plant and machinery acquired by AMCL is TZS 1,800,000,000.