Explain how the non-current asset should be treated including amount to be recognisedaccordingly. (10 Marks)

(b) How should the Rs200,000 worth of new components be accounted for in accordance with IAS 16. (5 Marks)

(c) Every five years the machine will need a major overhaul in order to keep running. Howshould this be accounted for. (4 Marks)

1. 0n 1 October 2020 Clanton acquired a machine under the following terms. Hours Rs Manufacturer's base price 1,050,000 Trade discount (applying to base price only) 20% Early settlement discount taken (on the payable amount of the base cost only) 5% Freight charges 30,000 Electrical installation cost 28,000 Staff training in use of machine 40,000 Pre-production testing 22,000 Purchase of a three-year maintenance contract 60,000 0n 1 October 2022 Clanton decided to upgrade the machine by adding new components at a cost of Rs200,000, This upgrade led to a reduction in the production time per unit of the goods being manufactured using the machine. (a) Explain how the non-current asset should be treated including amount to be recognised accordingly. (10 Marks) (b) How should the Rs200,000 worth of new components be accounted for in accordance with IAS 16. (5 Marks) A (c) Every five years the machine will need a major overhaul in order to keep runn 2/ 3 V should this be accounted for. (4 Marks) \\