On April 30, 2017, Ayayai Corporation ordered a new passenger ship, which was delivered to the designated cruise port and available for use as of June 30, 2017. Overall, the cost of the ship was $97 million, with an estimated useful life of 12 years and residual value of $30 million. Ayayai expects that the new ship, as a whole, will provide its greatest economic benefits in its early years of operation. After further research and discussion with management, it is determined that the ship consists of major parts with differing useful lives, residual values, and patterns of providing economic benefits:
Pattern of
benefits
Part
Cost
Useful life
Residual value
Engines $925,000 per
8 years
(6)
engine
$110,000 per
engine
Varies with
Total
output
(nautical
miles)
6 million
activity
Hull
$3,950,000
10 years
$501,000
Highest in
early years
7.80
million
Body
$87.50
million
15 years
$15.00 million
Evenly over
12.40
life of body
million
The ship's first voyage took place on August 1, 2017. The ship sailed a total of 323,000 nautical miles in 2017. Ayayai prepares financial statements in accordance with IFRS.