Question

How are major inspections treated, e.g., inspection of Air Canada planes, under IFRS?

a) Expensed as incurred
b) Capitalized and amortized
c) Recorded as a liability
d) Ignored for financial reporting purposes

Answer 1

The correct option is: b) capitalized and amortized. Under IFRS, major inspections are capitalized and amortized over the useful life of the asset. This means that the costs of major inspections are treated as an asset and recorded on the balance sheet.

Step-by-step explanation:

Under IFRS (International Financial Reporting Standards), major inspections, such as the inspection of Air Canada planes, are capitalized and amortized. This means that the costs of major inspections are treated as an asset and recorded on the balance sheet. The costs are then gradually expensed or amortized over the useful life of the asset.

The correct option is: b) capitalized and amortized. Under IFRS, major inspections are capitalized and amortized over the useful life of the asset. This means that the costs of major inspections are treated as an asset and recorded on the balance sheet.