Hello, how do I solve the both of these? ### Required Information[The following information applies to the questions displayed below.]A recent annual report for Celtic Air Lines included the following note:#### NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**Maintenance Costs**We record maintenance costs related to our fleet in aircraft maintenance materials and outside repairs. Maintenance costs are expensed as incurred, except for costs incurred under power-by-the-hour contracts, which are expensed based on actual hours flown. Modifications that enhance the operating performance or extend the useful lives of airframes or engines are capitalized and amortized over the remaining estimated useful life of the asset or the remaining lease term, whichever is shorter.Assume that Celtic made extensive repairs on an airplane engine, increasing the fuel efficiency and extending the useful life of the airplane. The existing airplane originally cost $4,500,000, and by the end of last year, it was half depreciated based on use of the straight-line method, a 20-year estimated useful life, and no residual value. During the current year, the following transactions related to the airplane were made:a. Ordinary repairs and maintenance expenditures for the year, $680,000 cash.b. Extensive and major repairs to the airplane's engine, $2,810,000 cash. These repairs were completed at the end of the current year.c. Recorded depreciation for the current year.### Required:1. Applying the policies of Celtic, complete the following, indicating the effects for the preceding expenditures. Indicate the effects by entering positive value for increase, negative value for decrease.| | Aircraft | Accumulated Depreciation | Depreciation Expense | Repairs Expense | Cash ||--------------------|----------|--------------------------|----------------------|-----------------|----------|| Balance January 1 | $4,500,000 | $2,250,000 | | | || a. | | | | | || b. | | | | | || c. | | | | | || Balance December 31| | | | | | ### Required Information[The following information applies to the questions displayed below.]A recent annual report for Celtic Air Lines included the following note:#### NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**Maintenance Costs**We record maintenance costs related to our fleet in aircraft maintenance materials and outside repairs. Maintenance costs are expensed as incurred, except for costs incurred under power-by-the-hour contracts, which are expensed based on actual hours flown. Modifications that enhance the operating performance or extend the useful lives of airframes or engines are capitalized and amortized over the remaining estimated useful life of the asset or the remaining lease term, whichever is shorter.Assume that Celtic made extensive repairs on an airplane engine, increasing the fuel efficiency and extending the useful life of the airplane. The existing airplane originally cost $4,500,000, and by the end of last year, it was half depreciated based on use of the straight-line method, a 20-year estimated useful life, and no residual value. During the current year, the following transactions related to the airplane were made:a. Ordinary repairs and maintenance expenditures for the year, $680,000 cash.b. Extensive and major repairs to the airplane's engine, $2,810,000 cash. These repairs were completed at the end of the current year.c. Recorded depreciation for the current year.#### 2. What was the net book value of the aircraft on December 31 of the current year?**Net book value**: [Answer Box]

The frequent usage of the assets for business reasons reduces the value. Throughout the asset's…

A recent annual report for Celtic Air Lines included the following note: NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Maintenance Costs We record maintenance costs related to our fleet in aircraft maintenance materials and outside repairs. Maintenance costs are expensed as incurred, except for costs incurred under power-by-the-hour contracts, which are expensed based on actual hours flown. Modifications that enhance the operating performance or extend the useful lives of airframes or engines are capitalized and amortized over the remaining estimated useful life of the asset or the remaining lease term, whichever is shorter. Assume that Celtic made extensive repairs on an airplane engine, increasing the fuel efficiency and extending the useful life of the airplane. The existing airplane originally cost $4,500,000, and by the end of last year, it was half depreciated based on use of the straight-line method, a 20-year estimated useful life, and no residual value. During the current year, the following transactions related to the airplane were made: a. Ordinary repairs and maintenance expenditures for the year, $680,000 cash. b. Extensive and major repairs to the airplane's engine, $2,810,000 cash. These repairs were completed at the end of the current year. c. Recorded depreciation for the current year. Required: 1. Applying the policies of Celtic, complete the following, indicating the effects for the preceding expenditures. Indicate the effects by entering positive value for increase, negative value for decrease. Balance January 1 a. b. C. Balance December 31 Aircraft $ 4,500,000 Accumulated Depreciation Depreciation Expense $ 2,250,000 Repairs Expense Cash

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q