Obra Ltd is your client. It has adopted IFRS as the financial reporting framework and has asked you to assist in dealing with the following issues. On I January 2014

Obra   Ltd  is your   client.   It  has  adopted   IFRS   as  the   financial     reporting    framework     and  has asked  you  to assist  in dealing    with  the following    issues. On  I January 2014 Obra Ltd acquired a machine under the following terms. Manufacturer’s base price GHS1,050,000 Trade discount (applying to base price only) 20% Early settlement discount taken (on the payable amount of the base cost only)   5% Freight charges    GHS 30,000 Electrical  installation cost  GHS 28,000 Staff training  in use of machine    GHS 40,000 Pre-production testing  GHS 22,000 Purchase of a three-year maintenance contract  GHS60,000 Estimated residual value    GHS 20,000 Estimated life  in machine hours  6,000 hours Hours used  -year  ended 31  December 2014  –  1,200 hours – year ended 31 December 2015                           1,800 hours – year ended 31  December 2016 (see below)       850 hours On I January 2016    Obra Ltd decided  to upgrade the machine by adding new components at a cost of GHS200,000. This   upgrade led  to a reduction  in the production  time per unit of the goods  being  manufactured  using  the  machine. The  upgrade  also   increased  the  estimated remaining life of the machine at  I    January 2016 to 4,500 machine  hours and its estimated residual value was revised to GHS40,000. Required Prepare extracts  from the statement of profit  or loss and statement of financial position for the above machine for 31 December  2014,

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