Plant and equipment have an average useful life

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At the end of 2017, the Rolls-Royce Group reported in its footnotes that its plant and equipment had an original cost of £5,035 million and that accumulated depreciation was £2,984. Rolls-Royce depreciates its plant and equipment on a straight-line basis under the assumption that the assets have an average useful life of 12 years (assume a 10 percent salvage value). Rolls-Royce's tax rate equals 19.25 percent.

What adjustments should be made to Rolls-Royce's (1) balance sheet at the end of 2017 and (2) income statement for the year 2018, if you assume that the plant and equipment have an average useful life of ten years (and a 10 percent salvage value)?

Reference no: EM132540754

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