Reference no: EM132919959
Question - Gambit Corporation purchased a new plant asset on April 1, 2020, at a cost of $769,000. It was estimated to have a useful life of 20 years and a residual value of $300,000, a physical life of 30 years, and a salvage value of $0. Gambit's accounting period is the calendar year. Gambit prepares financial statements in accordance with IFRS.
Required -
a. Calculate the depreciation for this asset for 2020 and 2021 using the straight-line method.
b. Calculate the depreciation for this asset for 2020 and 2021 using the double-declining-balance method.
c. Calculate the depreciation for this asset for 2020 and 2021 using the straight-line method and assuming Gambit prepares financial statements in accordance with ASPE.
d. Assume that additional information has been provided relating to the cost ($769,000). There are three components of the plant asset. Components 1, 2, and 3 have costs of $400,000, $254,000, and $115,000, respectively. The useful lives of components 1, 2, and 3 are 25, 20, and 30 years, respectively.
Determine straight-line depreciation expense for 2020 and 2021 for each component under IFRS if the residual value is $100,000 for component 1, $154,000 for component 2, and $46,000 for component 3.
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