Answered step by step
Verified Expert Solution
Question
1 Approved Answer
On January 1, 2021, CAE Company acquires an asset for $450,000,000. It had to spend an additional $24,000,000 to prepare the asset for the management's
On January 1, 2021, CAE Company acquires an asset for $450,000,000. It had to spend an additional $24,000,000 to prepare the asset for the management's intended use. The asset's retirement costs at the end of its useful life of 30 years are estimated to $130,000,000. The discount rate is 5%. The asset's residual value is $80,000,000 and the straight-line method is used for depreciation. CAE Company applies IFRS. Ignore decimals in your calculations. Required- a) Prepare the journal entry to record the acquisition of the asset on January 1, 2021, assuming cash is used to pay for the asset's related costs (other than the ARO). b) Prepare all required adjusting entries on December 31, 2021 and December 31, 2022. c) Assume that on January 15, 2030, the asset's retirement costs are re-estimated to $150,000,000, while the asset's total useful life is shortened to 25 years. The discount rate to be used is 5.5%. Prepare the journal entry to record this change on January 15, 2030 and the required adjusting entries on December 31, 2030
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started