QUESTION THREE

Richy Limited has plant that cost R$345000($including vat$)$ on $01$ January $2018.$ Installation

and modification costs R$69000($including vat$).$ Transfer costs paid to lawyer amounted to

R$20000.$ Transport costs for bringing the asset to location amounted to R$20000.$ The plant

was ready for use on $01$ January $2018.$ The machines were cleaned on $01$ March $2018$ at a

cost of R$10000.$ Due to the low order levels in April $2018$ the plant stood idle.

Depreciation is provided over its useful life of $5$ years using the straight line method to a nil

residual value.

Richy Limited measures plant under the revaluation model. The plant was revalued as

follows:

$31$ December $2018$ R$310000$

$31$ December $2019$ R$300000$

$31$ December $2020$ R$250000$

Richy Limited transfers the maximum amount from the realised portion of the revaluation

surplus to equity. VAT must be calculated at $15\%.$

Required:

Disclose the above information in the notes to the financial statements for years ending

$2018,2019$ and $2020.($Include in you answer the journal entries that must be recorded in the

general journal.$)$