XUZ Ltd purchased a building on 1 October 2021. The following costs were incurred: Original purchase price R4 620 000

Admin and overhead R 225 000

Transfer/Legal fees R 300 000

(12 marks)

The building had a residual value of R400 000 and an estimated useful life of 20 years

On 31 December 2021, the fair value was R445 000, costs to sell R100 000 and restructuring costs R125 000 and the value in use was R425 000.

Assume a tax rate of 28 %

REQUIRED: Calculate the impairment loss for the year ended 31 December 2021

3.2 Prepare the journal for the impairment loss and tax implications, for the impairment loss as identified in 3.1

(5 marks)

3.3 Taking into consideration the impairment of assets, what is the indicator review and what factors the indicator review depends on? Briefly discuss (5 marks)

3.4 The relevant cash flows are those cash inflows and outflows that can be directly linked to the use of an asset or

cash generating unit. To establish these cash flows, discuss what factors need to be considered? (4 marks)