Part A (40 Marks) Diagnostics Ltd is a key supplier of medical equipment to hospitals and other health facilities. Diagnostics Ltd was incorporated under the Companies Act of 2008 in 2012, and is a registered VAT vendor. All its suppliers are also registered VAT vendors and VAT is calculated at a rate of 14% The following information was extracted from the records of Diagnostics Ltd for the reporting period ended 31 March 2015 Note Dr Cr 12 500 000 Sales Cost of sales 5 850 000 1 720 000 Employee benefit expense Dividend income from subsidiary Management fee from subsidiary 540 000 135 000 Interest income 278 000 Finance costs 224 000 Auditors remuneration 785 000 Other expenses 235 000 Property, plant and equipment 1.9361 000 Accumulated depreciation (01 April 2014) 1. Investment in subsidiary 4 230 000 Trade receivables 2 5 670 000 5 480 000 3 2 578 000 8 244 000 4. 2 535 000 Inventories Cash and cash equivalents Trade and other payables South African Revenue Service (SARS) Long term borrowings Share capital Retained earnings (01 April 2014) 195 000 5. 1 900 000 6. 12 500 000 3 214 000 39 082 000 39 082 000 The following transactions have not been recorded: 1. Property, plant and equipment The total depreciation for the current reporting period was correctly calculated as R1 207 000 (plant R902 000 and vehicles R305 000). An impairment test (subsequent to the calculation of depreciation) revealed that plant with a carrying value of R2 758 000 has a recoverable amount of R 2 000 000 A vehicle with a cost of R450 000 and accumulated denreciation of R145 n un to the date of the theft) The following transactions have not been recorded: 1. Property, plant and equipment The total depreciation for the current reporting period was correctly calculated as R1 207 000 (plant R902 000 and vehicles R305 000). An impairment test (subsequent to the calculation of depreciation) revealed that plant with a carrying value of R2 758 000 has a recoverable amount of R 2 000 000. A vehicle with a cost of R450 000 and accumulated depreciation of R145 000 (up to the date of the theft) was stolen during the year. The insurer paid R330 600 on the claim. Another vehicle with a carrying value of R325 000 was sold to a second hand dealer for R399 000 (including VAT). 2. Trade receivables A debt of R79 800 owed by Vanish Ltd was deemed as irrecoverable. The finance director authorized the write off. Furthermore, after reviewing the rest of the receivables, it was decided that the allowance for doubtful debts should be increased by R185 000. 3. Inventories A physical stock count on 31 March 2015 revealed that inventory with a cost of R450 000, had a net realisable value of R375 000. In addition, it was also discovered that inventory with a cost of R83 000 was missing. 4. Cash and cash equivalents The bank statement for March 2015 was received on 1 April which reflected bank charges of R1 710 and interest income of R1 200 that still had to be recorded. 5. Long term borrowings The accountant of Diagnostics Ltd prepared the following amortization table for a loan that was obtained from High Street Bank during the year. Date Instalment Interest Amortised cost R RR 1 900 000 01 April 2014 31 March 2015 475 867 152 000 1 576 133 31 March 2016 475 867 126 0911 226 356 31 March 2017 475 867 98 108 848 597 31 March 2018 475 867 67 888 440 618 31 March 2019 475 867 35 2490 loon nttronto tarot too DAPADI Was missing. 4. Cash and cash equivalents The bank statement for March 2015 was received on 1 April which reflected bank charges of R1 710 and interest income of R1 200 that still had to be recorded. 5. Long term borrowings The accountant of Diagnostics Ltd prepared the following amortization table for a loan that was obtained from High Street Bank during the year. Date Instalment Interest Amortised cost R R R 01 April 2014 1 900 000 31 March 2015 475 867 152 000 1 576 133 126 091 1 226 356 31 March 2016 475 867 31 March 2017 475 867 98 108 848 597 31 March 2018 475 867 67 888 440 618 31 March 2019 475 867 35 2490 The loan attracts interest at 8% per annum and is secured by a building with a carrying value of R2 100 000. The instalment due on 31 March 2015 has been paid on time. 6. Share capital The issued share capital comprises 100 000 ordinary shares issued at R100 each and 250 000 5% preference shares issued at R10 per share. On 1 December 2014, an additional 100 000 ordinary shares were issued at R105 each and were paid for on the same date. On the same date, an additional 100 000 5% preference shares were issued at R10 per share. Payment was received on the same day. A dividend of 30 cents per ordinary share was declared on 31 March 2015 7. Income tax The income tax expense for the year was correctly calculated as R664 557. Required a) Present only the statement of profit or loss for the reporting period ended 31 March 2015 in compliance with IFRS. (30 Marks)