3.1 Use the information below to answer the required question INFORMATION (12 marks) XUZ Ltd purchased a building on 1 October 2021. The following costs were incurred: Original purchase price R4 620000 Admin and overhead R 225000 Transfer/Legal fees R 300000 The building had a residual value of R400000 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 R425000. 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) INFORMATION AB Ltd acquired 85% of the ordinary shares of CF Ltd. The net assets were fairly valued on 1 January 2021 except for machinery that were undervalued by R450 000. The machine was purchased on 1 January 2020 for R1 000000 and had a useful life of 6 years. No adjustments at acquisition for the above matter. Assume a tax rate of 28% REQUIRED: Prepare the journal entries (with narrations) for the year ended 31 December 2022 (10 marks) 4.2 Read the information below: INFORMATION AB wanted to achieve a 25% GP for each sale completed. Inventory sales between AB and CFL td amounted to R1650 000 for the year ended 31 December 2022. Inventory on hand in CF Ltd previously purchased from AB Ltd: R675000(31December2022) R550000(31December2021) Assume a tax rate of 28% REQUIRED: Prepare the journal entries (with narrations) for the year ended 31 December 2022. (10 marks) AD Ltd purchased a machine to the value of R345 000 (vat inclusive) on 1 January 2021. They estimated the residual value to be R10 000 and the useful life to be 10 years. On 1 January 2023, the useful life was determined that only 5 years was remaining and a residual value of R5000. Assume a tax rate of 30% REQUIRED: Disclose the change in estimate for the year ended 31 December 2023. 5.2 Discuss how the following errors should be corrected (10 marks) 5.2.1 Errors that occurred in the current period 5.2.2 Immaterial errors from prior period 5.2.3 Material error from prior period ( 2 marks) (1 mark) (1 marks) 5.1 INFORMATION AD Ltd purchased a machine to the value of R345 000 (vat inclusive) on 1 January 2021. They estimated the residual value to be R10 000 and the useful life to be 10 years. On 1 January 2023 , the useful life was determined that only 5 years was remaining and a residual value of R5000. Assume a tax rate of 30% REQUIRED: Disclose the change in estimate for the year ended 31 December 2023. 5.2 Discuss how the following errors should be corrected 5.2.1 Errors that occurred in the current period 5.2.2 Immaterial errors from prior period 5.2.3 Material error from prior period 3.1 Use the information below to answer the required question INFORMATION XUZ Ltd purchased a building on 1 October 2021. The following costs were incurred: Original purchase price R4 620000 Admin and overhead R 225000 Transfer/Legal fees R 300000 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 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? 4.1 Use the information below INFORMATION AB Ltd acquired 85% of the ordinary shares of CF Ltd. The net assets were fairly valued on 1 January 2021 except for machinery that were undervalued by R450 000. The machine was purchased on 1 January 2020 for R1 000000 and had a useful life of 6 years. No adjustments at acquisition for the above matter. Assume a tax rate of 28% REQUIRED: Prepare the journal entries (with narrations) for the year ended 31 December 2022 4.2 Read the information below: INFORMATION AB wanted to achieve a 25% GP for each sale completed. Inventory sales between AB and CF Ltd amounted to R1650 000 for the year ended 31 December 2022. Inventory on hand in CF Ltd previously purchased from AB Ltd: R675000(31December2022)R550000(31December2021) Assume a tax rate of 28% REQUIRED: Prepare the journal entries (with narrations) for the year ended 31 December 2022