3 Reuse Ltd Reuse Ltd prepares financial statements to 31 December each year. The company's trial balance at 31 December 2021 is as follows: Land, at cost Buildings, at cost Machinery and equipment, at cost Accumulated depreciation at 1 January 2021 000 2,000 1,000 800 000 Buildings 200 Machinery and equipment 400 Inventory at 1 January 2021 300 Trade receivables and payables 250 500 Allowance for receivables at 1 January 2021 10 Bank balance 40 5% debentures (repayable in 5 years) 500 Ordinary shares of 1 each 320 Share premium 282.5 Retained earnings at 1 January 2021 1,000 Purchase and sales 2,000 5,000 Directors' fees 240 Wages and salaries 350 General distribution costs 500 General administrative expenses 700 Interest paid 12.5 Dividend paid 100 8.252.5 8,252.5 ...continued Additional information: (i) The buildings were acquired on 1 January 2011 and are depreciated using the straight-line method over a useful economic life of 50 years. Machinery and equipment are depreciated at 20% per annum on a reducing balance basis. Nil residual values are estimated for buildings, machinery and equipment. (ii) Reuse Ltd revalued the land and buildings at 31 December 2021. Land and buildings were revalued at 2.2 million and 1.3 million respectively. The directors of the company decided that these revaluations are to be incorporated into the financial statements for the year ended 31 December 2021. (iii) Buildings depreciation should be allocated 60:40 between administrative expenses and distribution costs. Depreciation of machinery and equipment should be allocated 10:90 between administrative expenses and distribution costs. (iv) The cost of inventory at 31 December 2021 is 400,000. (v) Reuse Ltd has recently been notified that a customer has gone into liquidation owing 40,000. It is highly likely that none of this will be recovered. In addition, an allowance for receivables is provided at 10% of trade receivables. (vi) The 5% debentures were issued on 1 January 2021. Interest is payable half-yearly on 30 June and 31 December. Reuse Ltd is yet to accrue for any outstanding interest on debentures. (vii) Directors' fees are to be treated as administrative costs. Wages and salaries should be allocated 40:60 between administrative expenses and distribution costs. (viii) Taxation for the year is estimated at 210,000, due on 6 April 2022. Required: a) Prepare the Statement of Profit or Loss and Comprehensive Income for the year ended 31 December 2021, in accordance with International Financial Reporting Standards. (55 marks) Somnus plc Somnus plc operates a chain of budget hotels across England. Included within the Statement of Financial Position of Somnus plc as at 31 December 2021 is property with a net book value of 100 million. One hotel based in Colchester, with a carrying amount of 8 million, is scheduled for demolition in January 2022. The costs of demolition are estimated at 0.27 million. The directors of Somnus plc originally planned to build a new hotel on the site of the demolished hotel. However, following a recent downturn in demand for hotel accommodation, the directors are now considering selling the site after demolition. Required: (b) Explain how Somnus plc should account for the demolition costs in accordance with IAS16 Property Plant and Equipment. (12 Marks) ...continued G plc G plc purchased machinery for its factory on 1 January 2020, paying 600,000. The supplying company's invoice recorded the following: Manufacturer's list price Less: Trade discount Delivery and installation fees 000 580 (20) 560 40 600 G Plc's accounting policy for depreciation applicable to this machinery is a straight-line basis over five years. Initial estimates at the purchase date put the residual value at 120,000. On 31 December 2021 G plc conducted an impairment review. The sale value of the asset on that date was 330,000, although this would be subject to sale costs of 18,000. Estimates of future cash flows generated by the machinery for the remainder of its useful life are inflows of 135,000, 105,000 and 185,000 (including the estimated residual value) for 2022, 2023 and 2024 respectively, with outflows of 25,000 in each year. All cash flows are assumed to occur at the end of each year for calculation purposes. A discount rate of 4% is applicable. Required: (c)(i) Determine if an impairment loss has occurred and explain any accounting treatment required affecting the G plc's statement of profit or loss and statement of financial position for the year ended 31 December 2021. (26 marks) (c)(ii) Calculate the depreciation charges applicable to the machinery for the three subsequent years 2022, 2023 and 2024. (7 marks)