Reference no: EM133000605

Chengeta Limited is a haulage truck operator. Due to the high incidence of road fatalities the government introduced legislation that requires all haulage trucks to undergo major roadworthiness inspections every two years.

The details of one such haulage truck are as follows:

• The haulage truck was purchased on 1 October 2019 for R1 200 000.

The following significant parts were identified:

• The engine was allocated a cost of R700 000 and expected to travel 350 000 km after which, it would have no residual value.
• The body and fittings were allocated a cost of R500 000 and had an estimated residual value of nil and a useful life of 5 years.

1. The first major inspection was performed on 1 January 2020 at a cost of R100 000. The haulage truck travelled 100 000 km during 2019 and 90 000 km in 2020.
2. On 1 July 2020, it came to light that the safety of its employees was at stake and the directors of Chengeta decided to put the haulage truck through an urgent major roadworthiness inspection before the next inspection was legally necessary. This
3. inspection was performed on the same day, and cost R170 000.

Problem 1: Prepare all journals relating to the haulage truck for the years ended 31 December 2019 and 31 December 2020.