Explain how each of these matters should be accounted for in accordance with the requirements of IAS 16.

Transcribed Image Text:

(a) A company buys an aircraft for €9,000,000. Under civil aviation rules, the aircraft requires a major inspection every three years at a cost of €200,000. Three years after the purchase of the aircraft it undergoes its first major inspection. The costs in relation to the inspection amounted to €220,000. (b) On 1 June 2009, a company spent €100,000 to replace the wall lining of one of its two furnaces. The furnace had been acquired six years previously and had a carrying value, at 1 June 2009, amounting to €420,000. Of this amount, €20,000 related to the original wall lining. (a) A company buys an aircraft for €9,000,000. Under civil aviation rules, the aircraft requires a major inspection every three years at a cost of €200,000. Three years after the purchase of the aircraft it undergoes its first major inspection. The costs in relation to the inspection amounted to €220,000. (b) On 1 June 2009, a company spent €100,000 to replace the wall lining of one of its two furnaces. The furnace had been acquired six years previously and had a carrying value, at 1 June 2009, amounting to €420,000. Of this amount, €20,000 related to the original wall lining.

Answer rating: 100% (QA)

Solution a Given From given information A Company buys Aircr... View the full answer