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 determined that the aircraft is composed of three significant components with the following original costs (in...

Under IFRS a depreciable asset comprised of components with different useful lives andor salvage values must be depreciated on a component basis Thus Surat has determined depreciation expense should b ...

Surat Limited paid cash to acquire an aircraft on January 1, 2017, at a cost of 30,000,000

Question:

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 . The company has determined that the aircraft is composed of three significant components with the following original costs (in rupees) and estimated useful lives:
Component ________________ Cost __________ Useful Life
Fuselage ................... 10,000,000 ............ 40 years
Engines .................... 15,000,000 ............ 30 years
Interior .................... 5,000,000 ............ 20 years
30,000,000
The U.S. parent of Surat does not depreciate assets on a component basis, but instead depreciates assets over their estimated useful life as a whole.
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.
Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...