Ayayai Corporation purchased a new plant asset on April 1, 2017, at a cost of $9

ID: 2561124 • Letter: A

Question

Ayayai Corporation purchased a new plant asset on April 1, 2017, at a cost of $960,000. It was estimated to have a useful life of 20 years and a residual value of $360,000, a physical life of 30 years, and a salvage value of $0. Ayayai’s accounting period is the calendar year. Ayayai prepares financial statements in accordance with IFRS.

Calculate the depreciation for this asset for 2017 and 2018 using the straight-line method. (Round answers to 0 decimal places, e.g. 5,275.)

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Calculate the depreciation for this asset for 2017 and 2018 using the double-declining-balance method. (Round answers to 0 decimal places, e.g. 5,275.)

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Calculate the depreciation for this asset for 2017 and 2018 using the straight-line method and assuming Ayayai prepares financial statements in accordance with ASPE. (Do not round intermediate calculations and round answers to 0 decimal places, e.g. 5,275.)

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Explanation / Answer

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As per ASPE depreciation expense is the higher of the two amounts.

(i) Cost less salvage value of over the life of the asset , and (ii) cost less salvage value over useful life.

As the life of the asset is greater than the useful life of the asset, depreciation over the useful life of the asset will be higher. Therefore the depreciation expense under ASPE will be :

Working:

Depreciation under straight line method Year Amount 2017 30000 2018 30000

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Ayayai Corporation purchased a new plant asset on April 1, 2017, at a cost of $9

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