Reference no: EM132659108

On 1 July 2016, Belarus had acquired a high tech plant at a cost of RM400,000 for the production of a popular brand of electrical goods. The plant is estimated to have a useful life of ten years. On the same date, Belarus signed a maintenance contract with AA Sdn. Bhd. to maintain the plant at an annual cost of RM3,000 per year. On 1 January 2018, the plant broke down and major repairs had to be carried out at a cost of RM10,500.

On 1 July 2019, Belarus decided to upgrade the software program of the plant which will double the production capacity of the plant. The cost of upgrading the software was RM38,000. The carrying amount of the old software program that was replaced was RM3,000 at 1 July 2019.

Required:

Question (i) Calculate the carrying amount of the plant as at 30 June 2020;

Question (ii) For subsequent expenditures that are not capitalised as part of the cost of the plant, give a brief explanation as to why they are not capitalised.