Surat Limited paid cash to acquire an aircraft on January 1, 2020, at a cost of 30,000,000 rupees. The aircraft has an e
Posted: Thu May 19, 2022 2:35 pm
Surat Limited paid cash to acquire an aircraft on January 1,
2020, 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 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. 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. Required:
a. Prepare journal entries for this aircraft for the years ending
December 31, 2020, and December 31, 2021, under (1) IFRS and (2)
U.S. GAAP. b. Prepare the entry(ies) that the U.S. parent would
make on the December 31,
2020, and December 31, 2021, conversion worksheets to convert
IFRS balances to U.S. GAAP. Thus, IFRS balances must be
converted to U.S. GAAP to prepare consolidated financial
statements. Ignore income taxes.
Required:
a. Prepare journal entries for this
aircraft for the years ending December 31, 2020, and December 31,
2021, under (1) IFRS and (2) U.S. GAAP.
b. Prepare the entry(ies) that the U.S.
parent would make on the December 31, 2020, and December 31, 2021,
conversion worksheets to convert IFRS balances to U.S. GAAP.
2020, 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 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. 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. Required:
a. Prepare journal entries for this aircraft for the years ending
December 31, 2020, and December 31, 2021, under (1) IFRS and (2)
U.S. GAAP. b. Prepare the entry(ies) that the U.S. parent would
make on the December 31,
2020, and December 31, 2021, conversion worksheets to convert
IFRS balances to U.S. GAAP. Thus, IFRS balances must be
converted to U.S. GAAP to prepare consolidated financial
statements. Ignore income taxes.
Required:
a. Prepare journal entries for this
aircraft for the years ending December 31, 2020, and December 31,
2021, under (1) IFRS and (2) U.S. GAAP.
b. Prepare the entry(ies) that the U.S.
parent would make on the December 31, 2020, and December 31, 2021,
conversion worksheets to convert IFRS balances to U.S. GAAP.