Surat Limited paid cash to acquire an aircraft on January at a cost of rupees. The aircraft has an estimated useful
life of 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:
The US 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 US GAAP. Thus, IFRS balances must be converted to US
GAAP to prepare consolidated financial statements. Ignore income taxes.
Required:
a Prepare journal entries for this aircraft for the years ending December and December under IFRS and US
GAAP.
b Prepare the entryies that the US parent would make on the December and December conversion worksheets
to convert IFRS balances to US GAAP.
