Shipper Inc. has acquired a large transport truck at a cost of $90,000 (with no breakdown of the component parts). The truck's estimated useful life is I 0 years. At the end of the seventh year, the powertrain requires replacement. It is determined that it is not economical to put any more money or time into maintaining the old powertrain. The remainder of the transport truck is in good working condition and is expected to last for the next three years. The cost of a new powertrain is $40,000.
(a) Should the cost of the new powertrain be recognized as an asset or as an expense?
(b) How should the transaction be measured and recorded if Shipper prepares financial statements in accordance with IFRS?
(c) How should the transaction be measured and recorded if Shipper prepares financial statements in accordance with ASPE?