Dashboard Events My Courses . This course es Fundamentals of Financial Accounting! > DAC 111: FUNDAMENTALS OF FINANCIAL ACCOUNTING 1-NAIRI (a) Discuss the three primary accounting problems associated with accounts receivable e recognition, valuation and disposal, (6 marks) (b) Distinguish between impairment and depreciation of an asset. (4 marks) (c) Viwanda Limited is installing a new plant equipment at its production facility in Industrial Area. The machinery was imported from China and below are the costs recorded by the accountant up to the point when the machinery started running. Amount paid to the plant manufacturer Ksh 15.500,000 Marine cover insurance costs from China to Nairobi - Ksh 2.200,000 Penalty paid to the government as the delivery truck was deemed overloaded - Ksh 350,000 Rebate from the plant manufacturer - Ksh 550.000 Clearance costs paid to the clearing and forwarding agent - ksh 850.000 Settlement discount for prompt payment at 10% of the cost net of the rebate Three years maintenance contract cost at Ksh 775.000 per annum Import duty. VAT and other customs charges Ksh 2.230.000 Initial testing costs - Ksh 250.000 Annual plant insurance costs after installation - Ksh 450.000 Monthly electricity bills attributable to running the new plant - Ksh 420.000 Partitioning and fabrication costs to install the new plant - Ksh 750.000 Required: Determine the costs that are to be capitalized with respect to the machinery (4 marks) em Viwanda Limited capitalized the above plant equipment on 1st July 2018. The equipment was deemed to have an estimated residual value of Ksh 3,000,000 and a useful life of 10 years. The equipment was thereafter sold for Ksh 12,000,000 on 31 December 2020, the last day of the accounting year of the business in order to be replaced with a higher capacity plant. To make the sale. Viwanda Limited had to incur dismantling costs and costs of transporting the machine to the buyer's premises. These amounted to KSh 2.200.000, Required: Compute the gain or loss on the disposal of the equipment assuming Viwanda Limited uses the straight line method of depreciation (6 marks)