Use the Following Information to Answer the Next Three Questions

question 37

Multiple Choice

Use the following information to answer the next three questions.
On January 1, 2013, BelgianAir purchases an airplane for €14,400,000.The components of the airplane and their useful lives are as follows:
$\begin{array}{|c|c|c|}\hline \text { Component } & \text { Cost } & \text { Usefull life } \\\hline \text { Frame } & € 7,200,000 & 24 \text { years } \\\hline \text { Engine } & 4,800,000 & 20 \text { years } \\\hline \text { Other } & 2,400,000 & 10 \text { years } \\\hline\end{array}$ BelgianAir uses the straight-line method of depreciation.The asset is assumed to have no salvage value.
-Under IFRS, the entry to record the acquisition of the airplane would include

• A)a debit to Asset/ Airplane of €14,400,000.
• B)a debit to Asset/ Airplane frame of €14,400,000.
• C)a debit to Asset/ Airplane engine of €4,800,000.
• D)cannot be determined from the information given.

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Definitions:

Finished Goods Inventory

The inventory of finished goods available for sale but have not been bought by consumers yet.

Cost Of Goods Manufactured

The total cost incurred by a company to produce goods during a specific period, including costs of materials, labor, and overhead.

Traditional Management Accounting

An approach to accounting focused on measuring financial information for managerial decision-making.

Budgeting Systems

Frameworks or processes used by organizations to plan, organize, and control their financial resources over a specific time period.