ASSIGNMENT 5 (15 MARKS) Wilmah Designs Ltd (Wilmah), is an entity that design and manufactures custom made clothing for the South African market. The entity conducts its operations in Cape Town and has a financial year ending 30 June. Nikita Kulfi, an accountant at Wilmah, has learnt that you are studying Accounting 100 at the University of Johannesburg and requested that you assist her with the following matters: MATTER 1 (5 MARKS) During the year, the entity entered into a new contract to produce nurses uniforms for BetCare Hospitals for the next 5 years. To facilitate for the required increase in production, the entity acquired new sewing machines on 31 December 2019 from Dineo Ltd worth R1 500 000. These machines have an expected useful life of 10 years. Ms. Kulfi correctly recognised the transaction on the day of purchase. She presented the following to the Financial Manager at year-end:

Carrying amount balance as at 30 June 2020

New Machines 1 500 000

Old Machines 30 000 000

Total 31 500 000

The financial manager was not happy with the balances presented above, and made the following statement: Ms. Kulfi did not subsequently measure the new machines at year end. REQUIRED: Write an email to Ms. Kulfi explaining the statement made by the Financial Manager