On April 30, 2020, Ayayai Corporation ordered a new passenger ship, which was delivered to the designated cruise port and available for use as of June 30, 2020. Overall, the cost of the ship was $93 million, with an estimated useful life of 12 years and residual value of $30 million. Ayayai expects that the new ship, as a whole, will provide its greatest economic benefits in its early years of operation. After further research and discussion with management, it is determined that the ship consists of major parts with differing useful lives, residual values, and patterns of providing economic benefits: Part Cost Useful life Residual value Pattern of benefits Total output (nautical miles) Engines (6) $925,000 per engine 8 years $100,000 per engine Varies with activity 6 million Hull $3,350,000 10 years $500,000 Highest in early years 7.50 million Body $84.10 million 15 years $14.98 million Evenly over life of body 12.00 million The ship’s first voyage took place on August 1, 2020. The ship sailed a total of 312,000 nautical miles in 2020. Ayayai prepares financial statements in accordance with IFRS. Prepare the journal entry to record the purchase of the ship, assuming that Ayayai paid cash for the purchase. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit June 30, 2020 Prepare the journal entries to record depreciation expense for 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Do not round intermediate calculations. Round answers to 0 decimal places, e.g. 5,275.) Date Account Titles and Explanation Debit Credit December 31, 2020 (To record depreciation on Ships Engines) December 31, 2020 (To record depreciation on Ships Hull) December 31, 2020 (To record depreciation on Ships Body)

On April 30, 2020, Ayayai Corporation ordered a new passenger ship, which was delivered to the designated cruise port and available for use as of June 30, 2020. Overall, the cost of the ship was $93 million, with an estimated useful life of 12 years and residual value of $30 million. Ayayai expects that the new ship, as a whole, will provide its greatest economic benefits in its early years of operation. After further research and discussion with management, it is determined that the ship consists of major parts with differing useful lives, residual values, and patterns of providing economic benefits: Part Cost Useful life Residual value Pattern of benefits Total output (nautical miles) Engines (6) $925,000 per engine 8 years $100,000 per engine Varies with activity 6 million Hull $3,350,000 10 years $500,000 Highest in early years 7.50 million Body $84.10 million 15 years $14.98 million Evenly over life of body 12.00 million The ship’s first voyage took place on August 1, 2020. The ship sailed a total of 312,000 nautical miles in 2020. Ayayai prepares financial statements in accordance with IFRS. Prepare the journal entry to record the purchase of the ship, assuming that Ayayai paid cash for the purchase. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit June 30, 2020 Prepare the journal entries to record depreciation expense for 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Do not round intermediate calculations. Round answers to 0 decimal places, e.g. 5,275.) Date Account Titles and Explanation Debit Credit December 31, 2020 (To record depreciation on Ships Engines) December 31, 2020 (To record depreciation on Ships Hull) December 31, 2020 (To record depreciation on Ships Body)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

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Part

Cost

Useful life

Residual value

Pattern of
benefits

Total output
(nautical miles)

Engines (6)

$925,000

per engine

years

$100,000

per engine

Varies with activity

6 million

Hull

$3,350,000

years

$500,000

Highest in early years

7.50 million

Body

$84.10

million

years

$14.98

million

Evenly over life of body

12.00 million

The ship’s first voyage took place on August 1, 2020. The ship sailed a total of 312,000 nautical miles in 2020. Ayayai prepares financial statements in accordance with IFRS.

Prepare the journal entry to record the purchase of the ship, assuming that Ayayai paid cash for the purchase. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Date	Account Titles and Explanation	Debit	Credit
June 30, 2020

Prepare the journal entries to record depreciation expense for 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Do not round intermediate calculations. Round answers to 0 decimal places, e.g. 5,275.)

Date	Account Titles and Explanation	Debit	Credit
December 31, 2020

	(To record depreciation on Ships Engines)
December 31, 2020

	(To record depreciation on Ships Hull)
December 31, 2020

	(To record depreciation on Ships Body)

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