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cost of servicing ge of the buses, th es every year. In punted to RM250

cost of servicing ge of the buses, th es every year. In punted to RM250

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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2. Trans Express operates a travel and tour business for both local and foreign tourists. As part of its operation, the company maintains a fleet of tour buses. The company made the following expenditures related to the fleet during year x1. a. The company has the engines of its buses inspected and serviced once three years. The cost of servicing in year xl was RM12,000 per every bus. b. Due to the excessive usage of the buses, the company normally replaces 20% of its fleet's engines every year. In year xl, the cost incurred to replace the engines amounted to RM250,000. c. The tyres on each vehicle are replaced once every three years. The cost of the new tyres installed in year xl amounted to RM125,000. d. During year x1, the company spent RM400,000 to have the buses rust proofed. Management expects that the buses will now last an extra three years. Required: How should Trans Express account for each of this expenditure?
Transcribed Image Text:2. Trans Express operates a travel and tour business for both local and foreign tourists. As part of its operation, the company maintains a fleet of tour buses. The company made the following expenditures related to the fleet during year x1. a. The company has the engines of its buses inspected and serviced once three years. The cost of servicing in year xl was RM12,000 per every bus. b. Due to the excessive usage of the buses, the company normally replaces 20% of its fleet's engines every year. In year xl, the cost incurred to replace the engines amounted to RM250,000. c. The tyres on each vehicle are replaced once every three years. The cost of the new tyres installed in year xl amounted to RM125,000. d. During year x1, the company spent RM400,000 to have the buses rust proofed. Management expects that the buses will now last an extra three years. Required: How should Trans Express account for each of this expenditure?
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