Problem
SMC Company purchases a building for $100,000. Included in this cost are $12,000 for electrical systems and $15,000 for the roof. The building is expected to have a 40-year useful life, but the electrical system will last for 20 years and the roof will last 15 years.
Task
• Assuming that straight-line depreciation is used, compute depreciation expense assuming that U.S. GAAP is used.
• Assuming that straight-line depreciation is used, compute depreciation expense for year one assuming IFRS is used (assume component depreciation)