QUESTION 2 (50 MARKS) SPECTATOR Entity manufactures vuvuzelas at its production plant in Soweto. The vuvuzelas are distributed across South Africa. SPECTATOR Entity is a registered VAT vendor and VAT is accounted for at a rate of 15%. SPECTATOR Entity's current reporting period ends on 31 December 2021 and the owner is expected to approve the 2021 financial statements on 15 February 2022. SPECTATOR Entity's manufacturing plant had an estimated useful life of 20 years and an estimated residual value of RO when production of vuvuzelas commenced on 1 January 2016. In addition to the plant, SPECTATOR Entity also owns two delivery vehicles and various equipment items at 31 December 2021. Since it commenced operations on 1 January 2016, SPECTATOR Entity has followed the accounting policy to write off assets over its estimated useful life according to the straight-line method. Equipment has an estimated useful life of 6 years and vehicles 5 years. The following balances that relate to property, plant and equipment appeared in SPECTATOR Entity's records on 1 January 2021: Plant Accumulated depreciation - plant Equipment Accumulated depreciation - equipment Vehicles Accumulated depreciation - vehicles The following additional information is available: 1 Plant Dr Cr R R 800 000 ? 285 000 101 250 300 000 1.1 During 2021 a decision was taken by the management of SPECTATOR Entity to change the depreciation method of plant from the straight-line method to the units of production method. It was consequently estimated that the plant will still manufacture 100 000 vuvuzelas during its revised estimated useful life as follows: Year 2021 2022 2023 2024 2025 Units 15 000 25 000 25 000 25 000 10 000 1.2 On 10 December 2021 the City of Johannesburg approved a decision to ban vuvuzela's from all future soccer matches in the Johannesburg Metropolitan. This will result in devastating consequences for the demand of vuvuzela's. The manufacturing plant is highly specialised, and it would therefore be very difficult to use the plant in the manufacturing of other goods. Upon instruction of the owner to consider a possible Page 5 of 7 ?