Component accounting – engine (continuation of Example 1)
The first major inspection takes place on Dec 31, 06, as planned. The actual cost of the inspection is CU 30. Replacement of the transformer is already effected on Dec 31, 10 because E wants to take advantage of a new, technically advanced transformer. The cost of the new transformer is CU 28. It has a useful life of 14 years. For simplicity reasons it is assumed that the loss on derecognition of the old transformer corresponds to its carrying amount immediately before derecognition.
Required
Prepare any necessary entries in E”s financial statements as on Dec 31, for the years 06, 10, and 11.
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