Answered step by step
Verified Expert Solution
Question
1 Approved Answer
VIENT OF ASSETS 20 MARKS Bobolicious Limited is a manufacturer of board games. The company owns a single item of plant on 31 December
VIENT OF ASSETS 20 MARKS Bobolicious Limited is a manufacturer of board games. The company owns a single item of plant on 31 December 2022, the Duopoly machine, which was acquired on 30 September 2020 at a cost of R380 000. The machine was put into production on the same date of acquisition. The disposable value of the Duopoly machine on the financial year end 31 December 2022 was R200 000. Bobolicious experienced declining sales due to changes in the demand for the product. Their accountant has informed them that, in order to comply with IFRS, they will have to perform an impairment test on the Duopoly machine, but he did not know how to do it. The accountant gathered the following information regarding the impairment test: Net cash flow per annum R70 000 After-tax discount rate 14% Residual value at the end of the useful life R20 000 Additional information: 1. The company's tax rate is 28%. 2. The estimated economic life of the Duopoly machine is 5 years, and it is depreciated at 20% on cost over the useful life of the asset. Required: 2.1 2.2 2.3 Determine the impairment loss for the year ended 31 December 2022. Disclose the following notes to the financial statements of Bobolicious Limited for the year ended 31 December 2022: a) Property, plant, and equipment b) Profit before tax c) Impairment loss Determine the depreciation expense on the Duopoly machine for the subsequent year 2023.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started