3. How should items of property, plant and equipment be measured at point of initial recognition?

4. How is cost determined? 9. What is meant by 'residual value' of an asset?

10.How does an entity choose between depreciation methods, for example, straightline versus diminishing balance models?

Exercise 5.4 Recently Sea Eagle Ltd experienced a strike that affected a number of its operating plants. The group accountant of Sea Eagle Ltd indicated that it was not appropriate to report depreciation expense during this period as the equipment was not used during the strike. She stated that during the strike the equipment did not depreciate and an inappropriate matching of costs and revenues would result if depreciation were charged. She based her position on the following points.

1. It is inappropriate to charge the period with costs for which there are no related revenues arising from production.

2. The basic factor of depreciation in this instance is wear and tear, and because the equipment was idle, no wear and tear occurred.

Required You are a part of the auditing team that analyses the accounts of Sea Eagle Ltd. Write report to your supervisor in relation to the views of the group accountant of Sea Eagle Ltd.

can you please reply me in your word.