- This topic has 8 replies, 5 voices, and was last updated 7 years, 7 months ago by .
-
Topic
-
Hey guys, I tried to post in the FAR study section but the forum is not letting me. It’s coming up with some error but I would love some help with this question. A transportation company purchased a passenger bus for $100,000 on January 1, year 1. The company expects the bus to be used for 20 years if it follows a maintenance schedule of replacing the engine after 10 years and replacing the seats every eight years. it estimates that the current cost to replace the engine is $25,000 and the current cost to replace the seats is $10,000. The company uses straight line depreciation and the bus has no residual value. The company considers any component equal to or greater than 10% of the overall cost to be significant. Under IFRS, how much depreciation expense should the company recognize for the bus for the year ended December 31, year 1?
A. 5,000
B. 7,000
c. 7,250
D. 8,000the correct answer is B.
- You must be logged in to reply to this topic.