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  3. a ship is purchased for 1,3 million cash on 1 janu

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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