On 1 January 2019, Challenger Ltd acquired a new jet aircraft costing $80 million, intended for international mobility for the company's senior executives for a period of 20 years, with no residual value expected at the end of its useful life. The purchase price breakdown is as follows:
- Engines: $40 million, with an estimated useful life of 10 years and no residual value.
- Airframe: $28 million, with an estimated useful life of 20 years and no residual value.
- Furniture and fittings: $8 million, with an estimated useful life of 5 years and no residual value.
- Inspection costs: $4 million, incurred every four years as required by aviation authorities.
Additional Information:
On 1 July 2022, Challenger Ltd conducted the required inspection and replaced carpets six months earlier than scheduled, incurring costs as follows: $300,000 for carpet replacement, $4,400,000 for inspection costs, and the next scheduled inspection is on 1 July 2026. Challenger Limited's reporting period ends in December.
Briefly outline how Challenger Limited shall account for the subsequent costs
(Inspection & replacement of carpets) during 2022, in accordance with IAS 16 Property, plant and equipment.
