Component Fuselage Engines Interior Cost Useful Life 10,000,000 15,000,000 5,000,000 40 years 30 years 20 years 30,000,000
Problems 18–25 assume that a foreign company using IFRS is owned by a company using U.S. GAAP. Thus, IFRS balances must be converted to U.S. GAAP to prepare consolidated financial statements. Ignore income taxes for each problem.
Surat Limited paid cash to acquire an aircraft on January 1, 2017, at a cost of 30,000,000 rupees. The aircraft has an estimated useful life of 40 years and no salvage value. The company has deter-mined that the aircraft is composed of three significant components with the following original costs (in rupees) and estimated useful lives:
The U.S. parent of Surat does not depreciate assets on a component basis, but instead
a. Determine the appropriate accounting for this aircraft for the years ending December 31, 2017, and December 31, 2018, under (1) IFRS and (2) U.S. GAAP.
b. Prepare the entry(ies) that the U.S. parent would make on the December 31, 2017, and December 31, 2018, conversion worksheets to convert IFRS balances to U.S. GAAP.
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