Question one Local Railways of Zimbabwe (LRZ) imported an Electric Bullet Locomotive (EBL) from Eastern Europe and put it into use on 1 April 2013. The train operates the Harare-Bulawayo route on daily basis. The cost of the EBL was divided into three main components, the Fabric at a cost of $462m, the entertainment, and interior fittings at $231m and the locomotive engines at $154m. The locomotive fabric has a useful life of 25 years while the estimated life of Interior fittings is 12 Years. Both the fabric and interior fittings are depreciated using the straight basis. The locomotive engine has an expected useful life of 40000 hours. The locomotive operated efficiently for the period to 31 March 2021. However, in the year ended 31 March 2021 the Electric Bullet Locomotive experienced multiple engine failures which cost the company a significant amount of revenue loss and compensation costs. The measured expired life of the Locomotive engine system on 31 March 2022 was 30000 rail hours. Due to the unreliability of engines, a decision was taken in early April 2021 to replace the whole of the Locomotive engine system at a cost of $215.6 million. The expected life of a new engine system was 50000 rail hours and, in the year, ended 31 March 2022 the electric locomotive had used its engines for 5000 rail hours. At the same time as the Engine system replacement, the company took advantage to do a limited upgrade to the interior fittings facilities at a cost of $92.4 million and repainted the locomotive fabric at a cost of $30.8 million. After the upgrade of the Interior fittings, it was estimated that their remaining useful life was five years (from the date of upgrade). For the purpose of calculating depreciation, all the work on the locomotive can be assumed to have been completed on 1 April 2021. Assume that there are no residual values. Required 1. Explain how Locomotive Fabric, interior fittings and the engine system will be treated in relation to the provisions of IAS 16 2. Calculate the amounts that will be written off in the statement of Profit or Loss and other comprehensive Income for the year to 31 March 2022 3. Calculate the carrying amount of the Electric Bullet locomotive at 31 March 2022 [25]