The following trial balance relates to KWEMPE at 31 March 2016: $,000 DR $,000 CR Equity shares of 50 Cents each ( note (V) ) 50,000 CR Share Premium 20,000 CR Retained earning 1 April 2015 11,200 CR Land & Building - at cost ( Land $10 Million ) (note (ii) ) 60,000 DR Plant & Equipment - at cost ( note (ii) ) 94,500 DR Accumulated depreciation at 1 April 2015: - Building 20,000 CR - Plant & Equipment 24,500 CR Inventory at 31 March 2016 43,700 DR Trade receivables 42,200 DR Bank 6,800 DR Defered tax ( note (iv) ) 6,200 DR Trade Payables 35,100 DR Revenue ( note (i) ) 550,000 DR Cost of Sales 411,500 DR Distribution Costs 21,500 DR Administrative expenses 30,900 DR Dividends paid 20,000 DR Bank Interest 700 DR Current tax ( note (iv) ) 1,200 CR Total $750,000 DR $750,000 CR

The following notes are relevant: (i) Revenue includes the sales of $10 million of maturing inventory made to Xpede on 1 October 2015. The of the goods at the date of sale was 7million and KWEMPE has an option to repurchase these goods at any time within three years of the sale at a price of $10 million plus accrued interest from the date of sale at 10% per annum. At 31 March 2016 the option had not been exercised, but it is highly likely that it will be before the date it lapses. (ii) Non- Current assets: On 1 october 2015, KWEMPE terminated the production of one of its product lines. From this date, the plant used to manufacture the product has been actively marketed at an advertised price of $4.2 million which is considered realistic. It is included in the trial balance at a cost of $9 million with accumulated depreciation ( at 1 April 2015 ) of $5 million.

On 1 April 2015, the Director of KWEMPE decided that the financial statements would show an improved position if the land and buildings were revalued to market value. At that date, an independent valuer valued the land at $12 million and the buildings at $35 million and these valuations were accepted by directors. The remaining life of the buildings at that date was 14 years. KWEMPE does not make a transfer to retained earnings for excess depreciationtion. Ignore defered tax on the revaluation surplus. Plant and equipment is depreciated at 20% per annum using the reducing balance method and time apportioned as appropriate. All depreciation is charged to cost of sales, but none has yet been charged on any non - current asset for the year ended 31 March 2016. (iii) At 31 March 2016, a provision is required for directors' bonuses equal to 1% of revenue for the year.

(iv) KWEMPE estimates that an income tax provision of $27.2million is required for the year ended 31 March 2016 and at that date the liability to deferred tax is $9.4million. The movement on deferred tax should be taken to profit or loss. The balance on current tax in the trial balance represents the under/over provision of tax liability for the year ended 31 March 2015.

(v) On 1 july 2015, KWEMPE made and recorded a fully subscribed rights issue of 1 for 4 at $1.20 each. Immediately before this issue, the stock market value of KWEMPE's shares was $2 each.

Required: ( a ) (i) Prepare the statement of profit or loss and other comprehensive income for KWEMPE for the year ended 31 March 2016. (ii) Prepare the statement of changes in equity for KWEMPE for the year ended 31 March 2016. (iii) Prepare the statement of financial position of KWEMPE for the year ended 31 March 2016.

Note: Notes to the financial statements are not required. ( b ) Calculate the basic earnings per share for KWEMPE for the year ended 31 March 2016.

( c ) During April 2016, the KWEMPE land and building were hit by a storm and severely damaged. One of the directors has approached you, asking about how this damage should be accounted for: ' I ' ve been reading something online which tells me the building may be impaired. I don't know what that means, so I'II need you to explain it to me; Required: Explain when an impairment review is required and how any impairment is calculated, showing how any impairement adjustment is made in the finacial statements. Your answer should make specific reference to the KWEMPA land and buildings.

Note: DR stands for Debit side and CR stands for Credit side as well.