Q BlueSky acquires an aircraft engine with a four-year guarantee. Based on their past experience, it is estimated that the engine can be flown for a maximum of 10,000 hours. The average annual flying hours are expected to be 2,000, therefore, BlueSky plans to depreciate the engine over five years. In reality, the number of flying hours is erratic, and varies with its wear and tear, obsolescence, and intended aircraft uselie, to transport freight or passengers). Therefore, Blue Sky concludes that the life of the aircraft cannot be measured with some precision in terms of its flying hours. In a good year. an aircraft can be flown for 3,000 hours. What is the appropriate depreciation method BlueSky should adopt! Select the best response, and then click Submit. Depreciate the aircraft evenly over three and a third years (le, the flying hours of a good year) Depreciate the aircraft evenly over the guaranteed period of four years. Depreciate the alrcraft based on the actual flying hours, Depreciate the aircraft based on the average annual flying hours. Q Ocean Six informs you that the market value of ships increases every year. Therefore, it is not appropriate to depreciate their ships. Do you agree with this statement? Select the best response, and then click Submit Yes, because depreciation should cease if there is expectation as to increase in the future economic benefits embodied in the ships. Yes, because depreciation reflects a decline in a value of an asset. In this case, the market value of the ships is increasing. Therefore, the ships should not be depreciated. No, because depreciation reflects consumption of economic benefits of the asset, nor its market value. Depreciation only ceases it the residual value is higher than the carrying value of the asset. If the company wants to reflect the market value they should revalue the ships. The residual value would, however, be assessed and adjusted on an annual basis and the depreciation charge recalculated on the new carrying amount It depends on whether the entity has chosen the cast or revaluation method. Q Sole Co. acquires an office building situated in a country with relatively low capital asset inflation rates. The estimated useful life is 30 years and Sole Co. adopts the revaluation model for this class of PP&E. The office building is expected to have only insignificant changes in fair value. How frequently should Sole Co. perform a revaluation of this office building in accordance with AS 167 Select the best response, and then click Submit Annually at the beginning of each reporting period Annually at the end of each reporting period With sufficient reguarity to ensure that the carrying amount of the office building does not differ materially from its on reporting dare Every three or five years, depending upon the Sole Co.'s accounting policy choice