Golden leisure is a private limited liability entity that operates a single cruise ship. The chip was acquired on 1 October 2000. Details of the cost of the ship’s components and their estimated useful lives are: 

At 30 September 2008 no further capital expenditure had been incurred on the ship. 

In the year ended 30 September 2008 the ship experienced a high level of engine trouble which had cost the entity considerable lost revenue and payroll costs. At 30 September 2008 the propulsion system was expected to work for 30,000 hours. Due to the unreliability of the engines, a decision was taken in early October 2008 to replace the whole propulsion system at a cost of EUR 280m. The expected life of the new propulsion system was 50,000 hours and in the year ended 30 September 2009 the ship had used its engines for 5,000 hours. 

At the same time as the propulsion replacement, the entity took the opportunity to do a limited upgrade to the cabin and entertainment facilities at a cost of EUR 120m and repaint the ship’s fabric at a cost of EUR 40m. After the upgrade of the cabin and entertainment area fittings, it was estimated that their remaining life was five years (from the date of upgrade). For the purpose of calculating depreciation, all the work on the ship can be assumed to have been completed on 1 October 2008. All residual values can be taken as nil. 

Calculate the carrying amount of Golden Leisure’s cruise ship at 30 September 2009 and its related expenditure in the income statement for the year ended 30 September 2009. Your answer should explain the treatment of each item.

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Component Ship's fabric (hull, decks etc) Cabins and entertainment area fittings Propulsion system Original cost Depreciation basis m 600 300 200 25 years straight-line 12 years straight-line Useful life of 40,000 hours