The following information relates to AC Ltd for the reporting period ended 31 December 2020.

Additional information

2020

2019

Investment property at fair value

2

12 400 000

8 250 000

Mortgage bond

2

(4 402 000)

(3 411 400)

Plant cost price

3

27 650 000

22 850 000

Plant under construction

3

0

2 850 000

Accumulated depreciation plant

3

(12 940 000)

(13 710 000)

Specific loan (incurred for the construction of the plant)

3

0

(6 000 000)

Trademarks cost price

4

2 400 000

5 100 000

Accumulated amortisation trademarks

4

(1 400 000)

(2 425 000)

Accumulated impairment trademarks

4

0

(875 000)

Suppliers loan

(800 000)

0

Investment in subsidiary (80% interest)

5

9 180 000

8 200 000

Investment in Q Ltd

6

962 500

0

Ordinary share capital

(18 000 000)

(14 000 000)

Additional information

1 Non-current assets

Except for the sale of non-current assets that are specifically mentioned, no other non-current assets were sold during the current financial reporting period.

2 Investment property

2.1 During the current reporting period a vacant stand adjacent to the existing investment property were purchased, which was partially financed through the acquisition of a further mortgage bond of N$1 500 000.

2.2 As at 31 December 2020, an increase of N$150 000 in the fair value of the investment property was recognised.

3 Plant

3.1 Plant under construction, which commenced at the beginning of 2019, was completed on 30 September 2020. This plant was constructed to expand the capacity of the company. The summarised detail of the account for plant under construction is as follows:

2020

Dr

Cr

1 Jan

Balance bd

2850 000

Jan - Sep

Construction expenses plus net interest capitalised to the amount of N$480 000

3150 000

30 Sep

Plant

6 000 000

3.2 During the year, plant with a cost price of N$2 600 000 and accumulated depreciation of N$2 470 000 was sold at a profit of N$70 000.

3.3 On 30 September 2020, plant with a cost price of N$1 800 000 and accumulated depreciation of N$720 000 was destroyed in a fire. Insurance compensation of N$1 000 000 was received in this regard.

3.4 The depreciation expense in respect of plant for 2020 is N$2 420 000.

3.5 The plant purchased during the year, was purchased in cash except for the amount that is still payable in respect of the suppliers loan. The interest expense on the suppliers loan is paid in cash at the end of each month. The plant was purchased to replace the plant sold.

4 Trademarks

4.1 On 31 December 2018 an impairment loss of N$875 000 was recognised in respect of trademark A. During 2020, trademark A was sold at a loss of N$25 000. The cost price of trademark A was N$2 700 000 and the accumulated amortisation at the time of the sale was N$1 275 000.

4.2 The amortisation expense in respect of trademarks for 2020 is N$250 000.

5 Investment in subsidiary

The initial investment (a 70% interest) was purchased during 2018. During 2020, AC Ltd purchased an additional number of shares in the subsidiary from another shareholder of the subsidiary for N$980 000 cash.

6 Investment in Q Ltd

During 2020, AC Ltd purchased 50 000 shares of a listed company, Q Ltd, on the NSX for N$900 000 (excluding transaction costs). The investment in the shares represents less than 1% of the issued shares of Q Ltd. The investment was acquired to obtain long term capital growth and to earn dividend income. On 31 December 2020 the market price of a Q Ltd share was N$19.25.

Determine the cash outflow relating to investment property purchased to expand.