Teapot, Ltd. is a foreign company that uses IFRS for its financial reporting. Teapot is a wholly-owned subsidiary of Davis Housewares Corp. which is a U.S. company that prepares its consolidated financial statements in accordance with U.S. GAAP. Teapot purchased a piece of equipment for $3,000,000 on January 1, 2020. The equipment has an overall useful life of 20 years and no salvage value. The equipment is comprised of the following three significant components, shown with their associated cost and useful life. As a corporate policy, Davis Housewares Corp. utilizes the straight-line method of depreciation for machinery and equipment and plans to extend this policy to Teapot, Ltd.Prepare the journal entry for the 2020 depreciation expense for Teapot, Ltd. based on IFRS accounting principles.

Question

Teapot, Ltd. is a foreign company that uses IFRS for its financial reporting. Teapot is a wholly-owned subsidiary of Davis Housewares Corp. which is a U.S. company that prepares its consolidated financial statements in accordance with U.S. GAAP. Teapot purchased a piece of equipment for $3,000,000 on January 1, 2020. The equipment has an overall useful life of 20 years and no salvage value. The equipment is comprised of the following three significant components, shown with their associated cost and useful life.  As a corporate policy, Davis Housewares Corp. utilizes the straight-line method of depreciation for machinery and equipment and plans to extend this policy to Teapot, Ltd.Prepare the journal entry for the 2020 depreciation expense for Teapot, Ltd. based on IFRS accounting principles.

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The Answer of Teapot, Ltd. is a foreign company that uses IFRS for its financial reporting. Teapot is a wholly-owned subsidiary of Davis Housewares Corp. which is a U.S. company that prepares its consolidated financial statements in accordance with U.S. GAAP. Teapot purchased a piece of equipment for $3,000,000 on January 1, 2020. The equipment has an overall useful life of 20 years and no salvage value. The equipment is comprised of the following three significant components, shown with their associated cost and useful life.  As a corporate policy, Davis Housewares Corp. utilizes the straight-line method of depreciation for machinery and equipment and plans to extend this policy to Teapot, Ltd.Prepare the journal entry for the 2020 depreciation expense for Teapot, Ltd. based on IFRS accounting principles.