Question 1 On October 1, 2017, Ocean Airways Ltd. purchased a new commercial air

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Question 1 On October 1, 2017, Ocean Airways Ltd. purchased a new commercial aircraft for a total cost of $78.00 million. Included in the total cost are the aircraft's 2 engines, at a cost of $7.80 million each, and the aircraft's body, which costs $62.40 million. The estimated useful life of each of the aircraft's 2 engines is 10 years, with a residual value of $0.78 million. The estimated useful life of the aircraft's body is 10 years, with a residual value of $3.90 million. The entire aircraft's useful life is limited to the life of the aircraft's body. ia Prepare the journal entries required on October 1, 2017, and December 31, 2017, if Ocean Airways prepares financial statements in accordance with IFRS and uses straight-line depreciation. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit October 1, 2017 December 31, 2017

Explanation / Answer

(a) Date Account titles and explanation Debit Credit Oct 1,2017 Aircraft-Engines (2*7.80) 15.6 Aircraft-Body 62.4 Cash 78 (Purchase of aircraft ) Dec 31,2017 Depreciation expense 1.833 Accumulated depreciation- Aircraft-engines [(15.6-0.78)/10*3/12] 0.3705 Accumulated depreciation- Aircraft-body [62.4-3.90)/10*3/12] 1.4625 (Recorded depreciation )

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