On Jan 01, 01, entity E, a railroad company, acquires a railway locomotive for CU 108 that is available for use on the same day Payment is effected in cash on the same day It is planned to use the engine for 24 years After every six years a major inspection of the engine is necessary On Jan 01, 01, the cost of this inspection would be CU 24 The engine consists of the following components Costs of purchase Pivot mounting with wheel sets 16 Engine box 19 Transformer 24 Electric power converter 13 Control units 18 Auxiliary converter 18 Total 108 The transformer is replaced after 12 years and is not serviced during the major inspection The other parts each have a useful life of 24 years and are serviced during each major inspection Required Prepare any necessary entries in Es financial statements as on Dec 31, 01 E regards the entire engine as a single item of property, plant, and equipment

Question: On Jan 01, 01, entity E, a railroad company, acquires a railway locomotive for CU 108 that is available for use on the same day.

On Jan 01, 01, entity E, a railroad company, acquires a railway locomotive for CU 108 that is available for use on the same day. Payment is effected in cash on the same day. It is planned to use the engine for 24 years. After every six years a major inspection of the engine is necessary. On Jan 01, 01, the cost of this inspection would be CU 24. The engine consists of the following components:

	Costs of purchase
Pivot mounting with wheel sets	16
Engine box	19
Transformer	24
Electric power converter	13
Control units	18
Auxiliary converter	18
Total	108

The transformer is replaced after 12 years and is not serviced during the major inspection. The other parts each have a useful life of 24 years and are serviced during each major inspection.

Required

Prepare any necessary entries in E”s financial statements as on Dec 31, 01. E regards the entire engine as a single item of property, plant, and equipment.

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