Hi, I need assistance with this question in order to prep for my exam tomorrow. Kindly answer my questions please. Q.1.2Q.1.3Q.1.4Discuss how the replacement of the ceramic heater should be accounted for in thefinancial records of Baggage Solutions Ltd for the year ended 31 March 2021.Support your answer with calculations where necessary.Discuss whether or not you agree with the accountant to raise a provision for theestimated cost of the future major inspection in the financial statement of BaggageSolutions Ltd as at 31 March 2021.Prepare the following notes to the financial statements of Baggage Solutions Ltd forthe year ended 31 March 2021.Property, plant and equipment (total column not required)●ProvisionsContingent liability Baggage Solutions Ltd manufactures top of the range luggage bags that are extremely light weight,strong and durable. The company specialises in trolley bags, and these can be sold separately or aspart of a set. The company's financial year end is 31 MarchThe following Information is available as at 31 March 2021Land and buildingsBaggage Solutions Ltd purchased land with a warehouse from Property Direct for R9 444 375, and thetransfer of the land and building was concluded on 1 July 2019. The normal payment terms ofProperty Direct is 2 months after transfer date. The agreement between Baggage Solutions Ltd andProperty Direct states that payment for the property should occur on 1 July 2020.The land constitutes 20% of the purchase price of the property. The useful life and residual value ofthe warehouse is 25 years and R900 000 respectively.On 1 April 2020 the fair value of the property is R8 700 000.Vacuum forming machineThe machine was purchased on 1 April 2018, for R525 000. It is used to mould the shape of the trolleybag by forming a vacuum in the plastic through extreme heat. The machine has an estimated usefullife of 10 years.On 30 November 2020, due to unscheduled loadshedding, the ceramic heater in the machinemalfunctioned and had to be replaced. The ceramic heater is a significant component of the machine.The new heater cost R24 450 and its estimated useful life is 3 years.The accountant is expecting the next inspection cost to be R26 320, and wants to recognise aprovision for this amount on 31 March 2021.WarrantyBaggage Solutions Ltd sells all trolley bags with a warranty which covers the cost of repairs for anydefects within the first year of purchase. Past experience and future expectations indicate thefollowing pattern of probable repairs:% of goods soldNature of defectsCost of repairs if all items haddefectsR85%No defects12%Minor defectsMajor defectsnil275 000550 0003%In the prior year, a provision was raised for R75 500. Repair costs incurred and paid during thecurrent year that relates to the prior year sales of trolley bags, amounted to R67 500. No furtherrepair costs are expected to be incurred which relates to the prior year sales.LawsuitDuring the current year, a customer instituted a claim against Baggage Solutions Ltd for damages andloss suffered of R85 000 during a business flight from George to Pretoria. He arrived in Pretoria tofind his luggage and all his electronic equipment stored in it, damaged beyond repair. The legaladvisors of Baggage Solutions Ltd, are of the opinion that it is possible that the entity will be foundliable. The trial will be finalised in the following year. There is no possibility of claiming this amountfrom a third party resulting in reimbursement.Additional Information:The pre-tax market related interest rate is 9.5%.The revaluation model is applied to both land and buildings. Revaluations are performed atthe beginning of the year..The cost model is applied to all other items of property, plant and equipment.

Q1.2.. The replacement of the ceramic heater will be accounted for by taking the difference between…

Q.1.2 Q.1.3 Q.1.4 Discuss how the replacement of the ceramic heater should be accounted for in the financial records of Baggage Solutions Ltd for the year ended 31 March 2021. Support your answer with calculations where necessary. Discuss whether or not you agree with the accountant to raise a provision for the estimated cost of the future major inspection in the financial statement of Baggage Solutions Ltd as at 31 March 2021. Prepare the following notes to the financial statements of Baggage Solutions Ltd for the year ended 31 March 2021. Property, plant and equipment (total column not required) Provisions Contingent liability

Q.1.2 Q.1.3 Q.1.4 Discuss how the replacement of the ceramic heater should be accounted for in the financial records of Baggage Solutions Ltd for the year ended 31 March 2021. Support your answer with calculations where necessary. Discuss whether or not you agree with the accountant to raise a provision for the estimated cost of the future major inspection in the financial statement of Baggage Solutions Ltd as at 31 March 2021. Prepare the following notes to the financial statements of Baggage Solutions Ltd for the year ended 31 March 2021. Property, plant and equipment (total column not required) Provisions Contingent liability

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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