On March 30 2011 Calvin Exploration purchased a drilling machine for $840000.

On March 30 2011 Calvin Exploration purchased a drilling machine for $840000. The estimated useful life of the machine is 10 years and no residual
value is anticipated.

An important component of the machine is the drill housing component that will need to be replaced in five years. The $200000 cost of the drill housing
component is included in the $840000 cost of the machine. Calvin uses the straight-line depreciation

Required:

a. Calculate depreciation on the drilling machine for 2011 and 2012 applying the typical U.S. GAAP treatment.

b. Repeat requirement 1 applying IFRS.