On June 30, 2018, Rosetta Granite purchased a machine for $120,000. The estimated useful life of the

Question:

On June 30, 2018, Rosetta Granite purchased a machine for $120,000. The estimated useful life of the machine is eight years and no residual value is anticipated. An important component of the machine is a specialized highspeed drill that will need to be replaced in four years. The $20,000 cost of the drill is included in the $120,000 cost of the machine. Rosetta uses the straight-line depreciation method for all machinery.

Required:

1. Calculate depreciation for 2018 and 2019 applying the typical U.S. GAAP treatment.

2. Repeat requirement 1 applying IFRS.

GAAP
Generally Accepted Accounting Principles (GAAP) is the accounting standard adopted by the U.S. Securities and Exchange Commission (SEC). While the SEC previously stated that it intends to move from U.S. GAAP to the International Financial Reporting Standards (IFRS), the...