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Bandai Airways Ltd purchased a new aircraft on 1 January 2014 for cash. Due to different useful lives, the frame and fittings are recognised...
Bandai Airways Ltd purchased a new aircraft on 1 January 2014 for cash. Due to different useful lives, the frame and fittings are recognised separately. The cost allocated to the frame amounted to $300,000. The cost allocated to the fittings amounted to $45,000. At the time of acquisition, the residual value of the frame was estimated to be $30,000 and its useful life to be 20 years. The residual value of the fittings was estimated to be $5,000 and its useful life to be 4 years.
To account for its PPE class of aircraft frames and fittings, Bandai Airways applies the revaluation method and depreciates them by using the straight-line method. Bandai Airways reports annually on 30 June. The company tax rate is 30%.
On 30 June 2014, an expert valuation was obtained showing that the aircraft frame had a fair value of $300,750 at that date. The fittings had a fair value of $38,000 at that date. For future depreciation, the residual value of the frame was adjusted to $29,750 and the residual value of the fittings remained the same. The remaining useful lives were assessed to be 20 years for frame and 3 years for fittings.
On 30 June 2015, the frame was assessed to have a fair value of $281,200 and the fittings’ fair value was $29,500.
Required:
According to AASB 116, prepare all related journal entries for the period from 1 January 2014 to 30 June 2015 in relation to the aircraft frame and fittings (Narrations are not required. Show all workings and round up to the nearest dollar).
