We need to form a forecast for sales volumes of the new Cushy-R range which we will be launching in April 2022. There are number of different athletic, shoes made from recycled materials currently on the market at a range of price points. I have sourced a graph that shows quarterly sales of athletic shoes made from recycled materials in Europe since the first quarter of 2018 (see Graph 1 attached). We can use this as a starting point for our forecast. Please form briefing notes for the Senior Management Team (SMT) which explain:

1. What Graph 1 shows us. Please also explain how to use the data in the graph to determine a forecast of quarterly sales volumes for the new Cushy-R range, using a fourpoint moving average approach to determine trend line. [40 marks] To meet demand, we will be replacing our weaving machinery with larger, more efficient machinery (details of which are attached in Table 1) I know that there will be questions at the SMT meeting later today about these assets and therefore | would like you to include in your briefing notes an explanation, with appropriate justification, of:

2. How the expenditure associated with the new weaving machinery will be initially recorded in our financial statements. Please also explain how the weaving machinery asset will be depreciated in our financial statements for the year ending 30 June 2022 [32 marks] 3. How the existing weaving machinery that is to be treated in our financial statements for the year ending 30 June 2022.

Table 1: Weaving machinery Transaction Details Purchase of The new machinery will be purchased on 1 March 2022. Its new weaving purchase price will be K$825,000 and we will need to pay import machinery duties of K$20,000. Installation and testing of the machinery will happen throughout March at a cost of K$14,000. The machinery will start to be used from 1 April 2022. We expect to use the new weaving machinery for 15 years, although the motors, which are a significant part of the machinery, will need to be replaced every 5 years. Sale of existing The existing weaving machinery will continue to be used until 1 weaving April 2022, when it will be dismantled. We expect dismantling to machinery cost K$6,400 and be completed on 30 April 2022. The asset will then be advertised for sale. Its carrying amount at 1 July 2021 was K$185,000 and it is being depreciated at K$2,500 a month. There is a good second-hand market for this type of weaving machinery and therefore we expect to be able to find a buyer. Sophia Grigg, Managing Director, expects to sell the machinery in September or October 2022 for a sales price of around K$200,000.Graph 1: Past sales history Actual sales of athletic shoes made from recycled materials in Europe 1200 100 38588 ( thousands of pairs) Quarterly sales volumes Q1 02 03 04 01 02 03 04 01 02 03 04 01 02 03 2018 2018 2018 2018 2019 2019 2019 2019 2020 2020 2020 2020 2021 2021 2021 Quarter and year Actual quarterly sales Note: . Q1 is the period January to March and so on