A ship is purchased for 1,3 million cash on 1 January 20X1 when its economic...
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Accounting
A ship is purchased for 1,3 million cash on 1 January 20X1 when its economic useful life was estimated to be 10 years.
This ship may only be used if it is inspected for faults every 3 years.
The 20X0 inspection was done on 31 December 20X0 and is included in the purchase price (although the exact cost thereof is not known).
The next inspection is due on 31 December 20X3. The expected cost of this future inspection is 400 000 and the present value thereof is 300 000 (discounted to 1 January 20X1).
Required:
Show how this should be journalised in 20X1.
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