PRC-1 · Chapter 6 · Question 36 of 100
A company purchases a commercial aircraft. The aircraft has a body (useful life 20 years) and engines (useful life 5 years). How should this asset be depreciated?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) The body and engines must be identified as separate components and depreciated separately over their respective useful lives.
Explanation
Under the component approach in IAS 16, each part of an item of PPE with a cost that is significant in relation to the total cost must be depreciated separately if it has a different useful life.
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