On January 1, 2020, Linkin Park Airlines acquired a new airplane for a total cost of P200 Million. A breakdown of the costs to build the airplane was given by the manufacturers:

Aircraft body P60,000,000

Engines (2) 80,000,000

Fittings:

Seats 20,000,000

Carpets 1,000,000

Electric Equipment:

Passenger seats 4,000,000

Cockpit 30,000,000

Equipment - food preparation 5,000,000

All costs include installation and labor costs associated with the relevant part. It is expected that the aircraft will be kept for 10 years and then sold. The main value of the aircraft at that stage is the body and the engines. The expected selling price is P42 Million with the body and engines retaining proportionate value.

Costs in relation to the aircraft over the next ten years are expected to be as follows:

Aircraft Body

This requires an inspection every two years for cracks and wear and tear, at a cost of P200,000.

Engines

Each engine has an expected life of four years before being sold for scrap. It is expected that the engines will be replaced in 2024 for P90 Million and again in 2028 for P120 Million. These engines are expected to incur annual maintenance costs of P6 Million. The manufacturer has informed Linkin Park that a new prototype engine with an extra 10% capacity should be on the market in 2026, and that existing engines could be upgraded at a cost of P20 Million.

Fittings

Seats are replaced every three years. Expected replacement costs are P24 Million in 2023 and P30 Million in 2029. The repair torn seats and faulty mechanisms is expected to cost P2 Million per annum. Carpets are replaced every five years. They will be replaced in 2025 at an expected cost P1.3 Million, but will not be replaced before the aircraft is sold in 2030. Cleaning costs per annum amount to P200,000. The electrical equipment (such as the TV) for each set has an annual repair cost of P300,000. It is expected that, with the improvements in technology, the equipment will be totally replaced in 2026 by substantially better equipment at a cost of P7 Million. The electrical equipment in the cockpit is tested frequently at an expected annual cost of P5 Million. Major upgrades to the equipment are expected every two years at expected costs of P5 Million (in 2022), P6 Million (in 2024), P6.9 Million (in 2026), and P8.2 Million (in 2028). The upgrades will take into effect the expected changes in technology.

Equipment - Food Preparation

This incurs annual costs for repair and maintenance of P400,000. The equipment is expected to be totally replaced in 2026.

Required: Based on the result of your audit, determine the following:

1. Total aircraft body-related expenses for 2020

A. 4,400,000

B. 4,300,000

C. 2,950,000

D. 6,100,000

2. Total engine-related expenses for 2020

A. 21,500,000

B. 16,111,111

C. 26,000,000

D. 20,000,000

3. Total expenses related to aircraft fittings for 2020

A. 18,033,334

B. 30,033,334

C. 15,366,667

D. 10,553,334

4. Total expenses related to the food preparation equipment for 2020

A. 1,233,333

B. 1,400,000

C. 833,333

D. 400,000

5. Total annual depreciation expense using the components approach

A. 15,800,000

B. 34,566,667

C. 20,000,000

D. 35,566,667