Discuss the accounting treatment for the expenses

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On 1 January x3, May Bhd acquired a plant costing $150,000, whose economic life was estimated to be 10 years with no scrap value. The plant was depreciated on a straight line basis. On 1 January x8, May Bhd incurred the following costs:

$ Repairs and annual overhaul of the plant 30,000 Purchase of spare parts 6,000

Replacement of a major part of the plant which reduced the operating costs 40,000

The carrying amount (Cost - accumulated depreciation) of the part being replaced 5,000

Original cost of part being replaced 30,000

Required:

Question 1: Discuss the accounting treatment for the above expenses and determine the value of the plant as at 31/12/x8

Reference no: EM132580464

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