Green Coil $($Pty$)$ Ltd is manufacturing company operating in the renewable energysector with a specific focus on solar energy. The company has a $31$ December year end.

Solar panel production line

Green Coil $($Pty$)$ Ltds solar panel production line qualifies as a cash$-$generating unit in terms of the requirements of IAS $36$: Impairment of Assets. The solar panel production line consists of the following assets: Carrying value $31$ December $2023$

Building R$9500000$

Machinery R$5250000$

Equipment R$1820000$

Total $=$ R$16570000$

On $31$ December $2023,$ the solar panel production lines recoverable amount was determined as R$15000000$ and an impairment was therefore recognised for the solar panel production line. Green Coil $($Pty$)$ Ltds Financial Accountant recognised the following journal to account for the impairment of the solar panel production line: Impairment loss $($P$/$L$)$ Debit amount of $1570000$

Accumulated impairment Building $($SFP$)$ credit amount: $894900$Accumulated impairment Machinery $($SFP$)$ credit amount: $502400$Accumulated impairment Equipment $($SFP$)$ credit amount: $172700$

$($Account for impairment of solar panel production line$)$

This was the only journal passed by the Financial Accountant to account for the impairment. You can assume that the allocation of the impairment amount in this journal was calculated correctly on a pro$-$rata basis per asset as required by IAS $36.$The following additional values as at $31$ December $2023$ were available:

Value in use $|$ Fair value $|$ Cost to sell

Building R$8500000|$ R$8650000|$ R$200000$

Machinery R$4500000|$ R$4600000|$ R$70000$

Equipment R$1700000|$ R$1850000|$ R$50000$

REQUIRED:

$1\mathrm{.}1)$ With reference to the information under Solar panel production line, discuss whether you agree with the impairment journal the Financial Accountant processed.Clearly indicate reasons why you agree or disagree with the journal processed by Green Coil $($Pty$)$ Ltds Financial Accountant. Include any correcting journals $($i$.$e$.$ do not redo all the journals, only correcting journals$)$ that may be required in the records of Green Coil $($Pty$)$ Ltd$.$ Include all calculations and round all amounts$/$figures to the nearest Rand$/$percentage where applicable. Ignore any tax implications. $(35$ marks$)$