Assignment task: Can someone pretty please help me with this question
KLM Lines is a private limited liability company that operates a single cargo ship. The ship was acquired on 1 October 2006. Details of the cost of the ship's components and their estimated useful lives are:
Component Original cost ($ million) Deprecation basis
Ship's fabric (hull, decks etc) 600 24 years straight-line
Cabins and fittings 120 10 years straight-line
Propulsion system (engine) 200 Useful life of 40,000 hours
In the year ended 30 September 2014 the ship had experienced a high level of engine trouble which had cost the company considerable lost revenue and compensation costs. The measured expired life of the propulsion system at 30 September 2014 was 20,000 hours. Due to the unreliability of the engines, a decision was taken in early October 2014 to replace the whole of the propulsion system with a new propulsion system at a cost of $160 million. The old propulsion system was disposed for $30 million. The expected life of the new propulsion system was 60,000 hours and in the year ended 30 September 2015 the ship had used its engines for 3,000 hours.
At the same time as the propulsion system replacement, the company took the opportunity to limited upgrade to the cabin and fittings at a cost of $40 million and repaint the ship's fabric at a cost of $12 million. After the upgrade of the cabin and fittings it was estimated that their remaining life was four years (from the date of the upgrade). At a same time, a minor repair was caried out for the ship's fabric at a cost of $2 million. For the purpose of calculating depreciation, all the work on the ship can be assumed to have been completed on 1 October 2014. All residual values can be taken as nil.
At 30 September 2014 no further capital expenditure had been incurred on the ship.
Required: Calculate the carrying amount of KLM Lines' cargo ship at 30 September 2015 and its related expenditure in the income statement for the year ended 30 September 2015.