XYZ group of companies owns and operates an item of plant that cost K320,000 and had accumulated depreciation of K200,000 at 1 October 2004. It is being depreciated at 12.5% on cost. On 1 April (exactly half way through the year) the plant was damaged when a factory vehicle collided into it. Due to unavailability of replacement parts, it is not possible to repair the plant, but it still operates, though at a reduced capacity. Also, it is expected that as a result of the damage, the remaining life of the plant from the date of the damage will be only two years. Based on its reduced capacity, the estimated present value of the plant in use is K75,000. The plant has a current disposal value of K10,000 (which will be nil in two years time), but XYZ group of companies has been offered a trade-in value of K90,000 against a replacement machine which has a cost of K500,000 (there would be no disposal costs for the replaced plant. XYZ group of companies is reluctant to replace the plant as it is worried about the long-term demand for the product produced by the plant. The trade-in value is only available if the plant is replaced. Required: Prepare extracts from the balance sheet and income statement of XYZ group of companies in respect of the plant for the year ended 30th September 2005. Your answer should explain how you arrived at your figures. Take note of IAS 16