Depreciation Expenses
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On July 1, Year 1, an entity that uses IFRS acquired equipment with a cost of $84,000 and an estimated life of 12 years. The cost of the machine included the $9000 cost of a component that must be replaced every 6 years and an initial inspection of fee of $3000. The equipment must be re-inspected every 3 years at an additional cost of $3000 per inspection. The entity uses straight-line depreciation. What is the depreciation expense for the year ended Dec 31, Year 1.
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Solution Summary
This solution shows how to calculate the depreciation expense of an asset in the given problem.
Solution Preview
IFRS requires that each major component be depreciated over its useful life
Machine cost = 84,000-9,000 component - ...
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