Hansa Airways has purchased a new aircraft for its fleet. The aircraft has an airframe and engines, both of which have significant cost in relation…

Auditor needs to consider the following attributes while verifying for depreciation and amortisation expenses: (i) The airframe and engines are significant parts of the aircraft. The auditor needs to verify whether each part has been depreciated separately, as applying a single rate to the total cost may not reflect the true consumption of each component. (ii) Obtain the understanding of entity's accounting policy related to depreciation and amortisation. (iii) Ensure the Company policy for charging depreciation and amortisation is as per the relevant provisions of the Companies Act, 2013/ applicable accounting standards. (iv) The accounting policy has been applied consistently year on year. Any change in the accounting policy has been adequately disclosed. (v) The change in the amortisation method for software must be checked for compliance. (vi) Whether the depreciation has been calculated after making adjustment of residual value from the cost of the assets.