Ishimura Extractive (IE) plc is a Manchester based mining company. It operates globally but its biggest operations are in the UK and from where it derives most of its income. It prepares its accounts to the 31st December 2021. You have been provided with the financial information below. Ishimura Extractive plc Income statement Year ended 31st December 2021 Revenue 95,500,000 Cost of sales (59,200,000) Gross Profit 36,300,000 Operating Expenses (34,100,000) Operating Profit 2,200,000 Other income 7,000,000 Profit before tax 9,200,000 Additional Information The finance team understand that most items of expenditure are allowable but have highlighted the following information. Cost of Sales: - This balance includes depreciation of 2,200,000 and the team are unsure how it should be treated as it is in cost of sales and not operating expenses. Operating Expenses: This balance is made up of lots of smaller administrative and distribution balances. On this basis the finance team have decided to provide a breakdown of specific items that they need some guidance on. Gifts and Entertaining: - Euro 2020 trip 3 sales staff took 10 staff from their biggest customer to watch the Euro 2020 final at Wembley. The event included the match, food and drinks. - Loyalty Awards 13 staff who have worked at IE for 20 years were each given a gold watch to thank them for their loyalty and long service. - Gifts a gift of a solar powered power bank, that included IEs logo and website on the front, was sent to 40 clients. 60,000 10,800 2,200 5001ACC Continued 5 Legal and Professional: - Accounting services This is for auditing services provided by Ledoitte LLP. - Contract advice Payment to a solicitor for advice regarding a sales contract with a new customer based in Cuba. - General provision As the economy is expected to recover post lockdown IE believe they can reduce their general provision for bad debts by 25,000. 145,000 1,100 (25,000) Miscellaneous: - Wages and salaries IE recently seconded an employee to help a charity for 6 months with their new accounting system. During this time IE paid their salary in full. - Subscriptions The company spent the total on various subscriptions covering the mining industry as well as professional subscriptions for the engineers and finance staff), within this amount the finance team included a 12,000 donation made to the Conservative political party. IE management believe that this party best represents the mining industry in terms of environmental rules. - Vehicle repairs A digging machine owned by the company was severely damaged in a mine collapse and they decided to buy a replacement machine, in June 2021, as it would be cheaper than repairs to the original. 19,500 50,000 31,000 Other income consists of: - Dividend income 2,000,000 - Interest received 4,000,000 - Profit on disposal (See disposal) 1,000,000 Capital additions and disposals On 1st January 2021 the tax written down value (TWDV) was as follows: - Main Pool 10,100,000 - Special Rate Pool 7,500,000 Additions purchased during the year Asset Date of purchase Cost Motor Car 1 (Diesel <50g>