ASSIGNMENT 6 You are provided with the following information for KB Ltd for the reporting period ended 31 March 2023: Statement of profit or loss Additional information R Revenue 22 000 000 Cost of sales (8 500 000) Gross profit 13 500 000 Other income 1. 670 000 Income from subsidiary 1. 1 850 000 Income from financial investments 1. 980 000 Distribution, Administration and Other costs (10 020 000) Finance costs 2. (470 000) Profit before tax 1. 6 510 000 Income tax expense (980 000) Profit for the year 5 530 000 In addition to the above, the following balances were extracted from the Statement of financial position at 31 March 2023 along with the respective comparative balances for the previous year. Additional information 2023 R 2022 R Property, plant and equipment 3. 6 278 000 7 400 000 Building-under-construction 4. 1 250 000 - Investment property 5. 2 050 000 1 750 000 Investment in listed shares 5. 1 800 000 2 100 000 Investment in subsidiary 5. 2 050 000 2 050 000 Trade receivables 3 190 000 2 350 000 Trade inventories 1 450 000 2 050 000 Share Capital (4 330 000) (3 450 000) Retained earnings (4 420 000) (2 080 000) Long term portion: Loan Magnolia Bank (1 250 000) (1 500 000) Specific loan: Building-under-construction (1 400 000) - Bank overdraft (1 973 000) (4 770 000) Trade payables (2 980 000) (4 200 000) 3 Current portion: Loan Magnolia Bank (250 000) (500 000) Shareholders for dividends (945 000) (550 000) Income tax payable (520 000) (650 000) - - 1. The Profit before tax note to the statement of profit or loss for the reporting period ended 31 March 2023 reflects, amongst others, the following items: R Income Profit on the sale of vehicle 120 000 Proceeds on insurance claim for damaged inventory 550 000 Expenses Loss on fair value adjustment on investment property 105 000 Bad debts (resulting from an adjustment of allowance for doubtful debts) 220 000 Write-down of inventory to net realisable value 115 000 Income from the subsidiary comprises dividends and management fees of R1 800 000 and R50 000 respectively, while Income from financial investments also comprises dividends received. Other relevant income/expenses and profits/losses are reflected elsewhere in the question or can be derived from the information provided elsewhere in the question. 2. In the current reporting period R115 000 was incurred on interest on the specific loan for a qualifying asset (building-under-construction). Interest income on surplus funds that were invested on the specific loan was R45 000. It is the policy of KB Ltd to capitalise borrowing costs to qualifying assets. All the interest costs incurred on all borrowings were paid during the reporting period. 3. The following is a presentation of the Property, plant and equipment note for the reporting period. Plant Vehicles Total Carrying amount beginning of the year 6 450 000 950 000 7 400 000 Gross carrying amount 10 500 000 2 000 000 12 500 000 Accumulated depreciation (4 050 000) (1 050 000) (5 100 000) Accumulated impairment Acquisitions 1 413 000 1 413 000 Disposal/Derecognition (550 000) (330 000) (880 000) Gross carrying amount (800 000) (750 000) (1 550 000) Accumulated depreciation 250 000 420 000 670 000 Depreciation (1 125 000) (480 000) (1 605 000) 4 Impairment (50 000) (50 000) Gross carrying amount 9 700 000 2 663 000 12 363 000 Accumulated depreciation (4 925 000) (1 110 000) (6 035 000) Accumulated impairment (50 000) (50 000) Carrying amount end of year 4 775 000 1 503 000 6 278 000 All acquisitions and disposals of vehicles were on a cash basis. The vehicle that was sold was subsequently replaced. The de-recognition of the plant refers to a separable section of the plant that was donated to a local non-profit organisation that assists the local community with entrepreneurial projects. 4. All costs incurred on the building-under-construction were paid for in cash during the reporting period. 5. In addition all disposals and/or acquisitions on the investment property, investment in listed shares and investment in subsidiary were on a cash basis. REQUIRED: Present the Statement of cash flows of KB Ltd for the reporting period ended 31 March 2023 according to the direct method. Note: - Ignore VAT. - Show all calculations as marks are awarded for these