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table [ [ 1 March 2 0 1 5 , table [ [ Machinery purchased at R 5 0 0 0 0 0

\table[[1 March 2015,\table[[Machinery purchased at R5000000 to manufacture],[ventilators.],[The total useful life of the machinery was estimated at 25],[years and the estimated residual value was R1000000.],[Machinery will be depreciated on a straight line basis.]]],[During the 2020 financial year,\table[[Since the outbreak of coronavirus, there were an increase],[in demand for ventilators and ICU-Ventilator Limited has],[increased their production of ventilators. Consequently the],[company had to change the estimated useful life of their],[manufacturing machines as from 1 march 2019.],[The total useful life of machinery was re-estimated at 20],[years and the estimated residual life was changed to R500],[000.],[The 2020 depreciation on machinery was correctly],[recorded and taken into account in the financial statements],[in accordance to original estimates.],[Management would like you to take the change in],[estimate into account and record the applicable],[adjustments. The company uses the re-allocation method],[to account for changes in estimates.]]]]
Income tax
The corporate tax rate is 28%
Required
2.1. Calculate the impairment loss / reversal on equipment on 29 February 2020.
2.2. Supply the journal entry to record the impairment/ reversal on equipment at 29 February 2020.
2.3. Refer to additional information number 2 to: Calculate the effect of the change in estimate on machinery using the re-allocation method. Detailed workings are required to show the following:
The carrying amount at 28 February 2019.
The machinery's depreciation (before and after change in estimate) for the financial year ended 29 February 2020.
The carrying amount at 29 February 2020.
The machinery's future depreciation (before and after change in estimate), at 29 February 2020.
2.4. Prepare the following notes to the financial statements of Graham Hospitals Limited for the year ended 29 February 2020 in accordance to international financial reporting standards
Profit before tax
Change in accounting estimate (Accounting policies are not required)
2.5. Prepare statement of comprehensive income of Graham Hospitals Limited for the year ended 29 February 2020 in accordance to international financial reporting standards. Show workings.
NB: (Comparatives are required for part 2.3,2.4 and 2.5)Graham Hospitals Limited is a company that manufactures ventilators on specialised machinery and supply hospitals in
Africa since 2015 with ventilators which they use in their intensive care units. The company's financial year end is 28
February.
You are given the following Statement of Comprehensive Income for the year ended 29 February 2020.
The above statement of comprehensive income for the year ended 29 February 2020, was prepared before adjusting for the
effects as explained in additional information 1 and 2.
Additional Information
Equipment
The following information on equipment is supplied to you and was correctly recorded in the financial years ending 28
February 2019 and 29 February 2020.
Adjustment at 29 February 2020
On 29 February 2020, the recoverable amount of the equipment has been estimated at R1350000. Management would
like to take the recoverable amount for equipment into account and record the applicable adjustments.
The auditor confirmed the following tax implications
Any impairment loss on the equipment is tax deductible, and
If there is reversal on the equipment's impairment loss the reversal will be taxable.
Machinery
The following information on machinery is supplied to you.
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