Friends (Pty) Ltd is a retailer of industrial machinery. The machinery sold by Friends (Pty) Ltd is purchased from local manufacturers. In recent years, Friends has also started manufacturing machines for the retail market. Friends has two retail outlets: one in Durban and one in Johannesburg. The manufacturing operation as well as bulk storage of stock is housed in a building in Johannesburg. The following information is provided for the year ended 28 February 2021. Sales Purchases at cost: Machines for retail Components for the manufacturing process Consumable stores A new manufacturing machine (for use in the manufacturing process) Spare parts for the manufacturing machine In June 2020, Friends (Pty) Ltd removed on of the machines that it had acquired for resale from stock and installed it in the factory for use in the manufacturing process. The machine had been acquired in March 2020 for R100 000. At the time that it was take out of stock, the machine's market value was R130 000. Opening stock on hand at 1 March 2020 was as follows: Machines for retail Work in progress (i.e. machines being manufactured) Consumable stores Labour and direct overhead costs in respect of the manufacturing process for the period 1 March 2020 to 28 February 2021. Stock on hand (at cost) at 28 February 2021 comprised: Machines acquired for retail A certain model of machine was considered to be obsolete. There were two such machines on hand. The machines had cost R20 000 each. The commissioner will allow these machines to be reflected at 50% of their cost. Work in progress Components used Labour and direct overheads Spare parts Consumable stores Additional tax allowances and deductions for the year Required: Compute Friends (Pty) Ltd's taxable income for the year ended 28 February 2021 NB: Ignore VAT R 25 000 000 10 000 000 2 000 000 500 000 200 000 30 000 2 000 000 500 000 20 000 4 000 000 1 220 000 28 000 22 000 30 000 150 000 2 800 000 8