B. Flying Eagles is an airline which treats its aircraft as complex non-current assets. The cost and other details of one of its aircraft are: $'000 Estimated life Exterior structure – purchase date 1 April 20W5* 120,000 20 years nterior cabin fittings – replaced 1 April 20X5 25,000 5 years Engines (2 at $9 million each) – replaced 1 April 20x5 18,000 36,000 flying hours Ten years before 20X5 No residual values are attributed to any of the component parts. At 1 April 20X8 the aircraft log showed it had flown 10,800 hours since 1 April 20X5. In the year ended 31 March 20X9, the aircraft flew for 1,200 hours for the six months to 30 September 20X8 and a further 1,000 hours in the six months to 31 March 20X9. On 1 October 20X8 the aircraft suffered a 'bird strike' accident which damaged one of the engines beyond repair. This was replaced by a new engine with a life of 36,000 hours at cost of $10.8 million. The other engine was also damaged, but was repaired at a cost of $3 million; however, its remaining estimated life was shortened to 15,000 hours. The accident also caused cosmetic damage to the exterior of the aircraft which required repainting at a cost of $2 million. As the aircraft was out of service for some weeks due to the accident, Flying Eagles took the opportunity to upgrade its cabin facilities at a cost of $4.5 million. This did not increase the estimated remaining life of the cabin fittings, but the improved facilities enabled Flying Eagles to substantially increase the air fares on this aircraft Required Calculate the charges to profit or loss in respect of the aircraft for the year ended 31 March 20X9 and its carrying amount in the statement of financial position as at that date. Note: The post-accident changes are deemed effective from 1 October 20X8
B. Flying Eagles is an airline which treats its aircraft as complex non-current assets. The cost and other details of one of its aircraft are: $'000 Estimated life Exterior structure – purchase date 1 April 20W5* 120,000 20 years nterior cabin fittings – replaced 1 April 20X5 25,000 5 years Engines (2 at $9 million each) – replaced 1 April 20x5 18,000 36,000 flying hours Ten years before 20X5 No residual values are attributed to any of the component parts. At 1 April 20X8 the aircraft log showed it had flown 10,800 hours since 1 April 20X5. In the year ended 31 March 20X9, the aircraft flew for 1,200 hours for the six months to 30 September 20X8 and a further 1,000 hours in the six months to 31 March 20X9. On 1 October 20X8 the aircraft suffered a 'bird strike' accident which damaged one of the engines beyond repair. This was replaced by a new engine with a life of 36,000 hours at cost of $10.8 million. The other engine was also damaged, but was repaired at a cost of $3 million; however, its remaining estimated life was shortened to 15,000 hours. The accident also caused cosmetic damage to the exterior of the aircraft which required repainting at a cost of $2 million. As the aircraft was out of service for some weeks due to the accident, Flying Eagles took the opportunity to upgrade its cabin facilities at a cost of $4.5 million. This did not increase the estimated remaining life of the cabin fittings, but the improved facilities enabled Flying Eagles to substantially increase the air fares on this aircraft Required Calculate the charges to profit or loss in respect of the aircraft for the year ended 31 March 20X9 and its carrying amount in the statement of financial position as at that date. Note: The post-accident changes are deemed effective from 1 October 20X8
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:B. Flying Eagles is an airline which treats its aircraft as complex non-current assets. The cost and other details
of one of its aircraft are:
$'000
Estimated life
Exterior structure – purchase date 1 April 20W5*
120,000
20 years
Interior cabin fittings – replaced 1 April 20X5
25,000
5 years
Engines (2 at $9 million each) – replaced 1 April
20X5
18,000
36,000 flying
hours
*Ten years before 20X5
No residual values are attributed to any of the component parts.
At 1 April 20X8 the aircraft log showed it had flown 10,800 hours since 1 April 20X5. In the year ended 31
March 20X9, the aircraft flew for 1,200 hours for the six months to 30 September 20X8 and a further 1,000
hours in the six months to 31 March 20X9.
On 1 October 20X8 the aircraft suffered a 'bird strike' accident which damaged one of the engines beyond
repair. This was replaced by a new engine with a life of 36,000 hours at cost of $10.8 million. The other engine
was also damaged, but was repaired at a cost of $3 million; however, its remaining estimated life was
shortened to 15,000 hours. The accident also caused cosmetic damage to the exterior of the aircraft which
required repainting at a cost of $2 million. As the aircraft was out of service for some weeks due to the
accident, Flying Eagles took the opportunity to upgrade its cabin facilities at a cost of $4.5 million. This did not
increase the estimated remaining life of the cabin fittings, but the improved facilities enabled Flying Eagles to
substantially increase the air fares on this aircraft
Required
Calculate the charges to profit or loss in respect of the aircraft for the year ended 31 March 20X9 and its
carrying amount in the statement of financial position as at that date.
Note: The post-accident changes are deemed effective from 1 October 20X8.
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