A Government Reported Expenditures for Infrastructure as Follows: $20 Million

Multiple Choice

A government reported expenditures for infrastructure as follows: $20 million for improvements and additions; $18 million to extend the life of existing infrastructure; $22 million for general repairs. The cost of its infrastructure, excluding land, is $600 million, and the infrastructure has an estimated life of 50 years, on average. Which of the following would be the reported expense in millions under each of the following options?

A) Depreciation Approach: $34; Modified Approach: $40
B) Depreciation Approach: $38; Modified Approach: $32
C) Depreciation Approach: $32; Modified Approach: $38
D) Depreciation Approach: $40; Modified Approach: $34