Covex Pharmaceuticals Sdn Bhd (Covex) is a company specializing in productions of pharmaceutical products. It has a financial year end every 31 March and owns a plant that it uses to produce and package vaccines. The plant was bought on 1 April 2017 at cost of RM1,500,000 and, at that date, it had an estimated useful life of five years. A review of the plant on 31 March 2019 concluded that the plants fair value was RM1,170,000. On 31 March 2020, Covex was informed by a major customer that it would no longer be placing orders with Covex, due to dissatisfaction over the vaccines produced by Covex since 2019. As a result, Covex revised its estimates that net cash inflows earned from the plant for the next three years will be: Year ended 31 March: RM 2021 250,000 2022 220,000 2023 254,000 Covexs cost of capital is 10%. On the same date, the plant has a fair value of RM530,000, The estimated cost to sell is RM40,000.

Required: i. Calculate the carrying amount of Covex's plant and the revaluation reserve at 31 March 2019. Prepare journal entries for the revaluation. (4 marks) ii. Calculate the recoverable amount of Covex's plant at 31 March 2020. (5 marks) iii. Prepare journal entries for the impairment loss of plant on 31 March 2020. (3 marks)

Transcribed image text: T QUESTION 1 (25 MARKS) 1. Covex Pharmaceuticals Sdn Bhd (Covex) is a company specializing in productions of pharmaceutical products. It has a financial year end every 31 March and owns a plant that it uses to produce and package vaccines. The plant was bought on 1 April 2017 at cost of RM 1,500,000 and, at that date, it had an estimated useful life of five years. A review of the plant on 31 March 2019 concluded that the plant's fair value was RM1,170,000 On 31 March 2020, Covex was informed by a major customer that it would no longer be placing orders with Covex, due to dissatisfaction over the vaccines produced by Covex since 2019. As a result, Covex revised its estimates that net cash inflows eamed from the plant for the next three years will be: Year ended 31 March: 2021 2022 2023 RM 250,000 220,000 254,000 Covex's cost of capital is 10%. On the same date, the plant has a fair value of RM530,000, The estimated cost to sell is RM40.000 Required: Calculate the carrying amount of Covex's plant and the revaluation reserve at 31 March 2019. Prepare journal entries for the revaluation (4 marks) . Calculate the recoverable amount of Covex's plant ar 31 March 2020. (5 marks) Prepare journal entries for the impairment loss of plant on 31 March 2020. (3 marks) (Total: 12 Marks) 2. The accounting profit before tax for the year ended 31 December 2020 for dey Sdn Bhd amounted to RM37.000. The draft statement of financial December 2020 contained the following assets and liabilities: D Assets Cash Accounts receivables 2020 (RM) 23,000 24.000 20 T9001 28,000