b) At the end of 2018, the Deperror Group reported that its Property, Plant and Equipment (PPE) had an original cost of 3,000 million and that accumulated depreciation was 1,200 million. The Deperror Group depreciates its Property, Plant and Equipment on a straight-line basis under the assumption that the assets have an average useful life of 10 years with a residual value/salvage value (i.e., value at the end of useful life) of 10% of the original cost. This gives rise to an annual depreciation rate of 9%, equal to (1-0.10) divided by 10 years. The Deperror Group's corporate tax rate is 20%. Based on analysis of other similar companies operating in the same industry as the Deperror Group, an analyst believes that, in order for Deperror Group's financial statements to be comparable with other similar companies operating in the same industry, its Property, Plant and Equipment should be depreciated more quickly, assuming an average useful life of 7 years with a residual/salvage value of 10%. This would give rise to an annual depreciation rate of 12.86%, equal to (1-0.10) divided by 7 years. The facts of the Deperror Group case as described above are summarized in the table below: Deperror Group Information on Property, Plant and Equipment (PPE) ( millions) COST AT END OF 2018 Base-case Revised 3,000.000 3,000.000 ACCUMULATED DEPRECIATION AT END OF 2018 AND DETERMINANTS Depreciation method Straight line Straight line Accumulated depreciation at start of year 1,200.000 ???? Residual value as proportion of cost (residual_prop) 0.100 0.100 Assumed total life (years) (= (1-residual prop)/Depreciation rate) 10.000 7.000 Depreciation rate (= (1-residual_prop)/life) 0.090 0.1286 Tax rate 20% 20% REQUIRED If it were assumed, as described above, that the Property, Plant and Equipment of the Deperror Group had an average useful life of 7 years with a residual value/salvage value of 10%, what adjustments would arise in respect of Deperror Group's: Balance sheet at the end of 2018? (i) (ii) Income statement for the year 2019? (iii) Balance sheet at the end of 2019? Assume that no new Property, Plant and Equipment will be purchased in 2019 and that no items of Property, Plant and Equipment will be disposed of in 2019. Your calculations should reflect the taxation effects of any adjustments. (23 marks) (TOTAL 50 MARKS)