Mint Condition Motors $($Pty$)$ Ltd $($henceforth $$Mint$)$ is a second$-$hand car dealer with its headquarters on Ondekkers Road in Johannesburg. The company has a $31$ December year$-$end.

Delivery Truck

Mint owns a delivery truck which is made up of a truck body and a truck trailer. The delivery truck was purchased at a total cost of R$900000$ on $1$ January $2018.$ At that date, R$600000$ of the purchase cost was allocated to the truck body and R$300000$ was allocated to the truck trailer. The truck body has a total estimated useful life of $10$ years and a R$200000$ residual value. The truck trailer has a total estimated useful life of $20$ years and a residual value of R$50000.$

The delivery truck suffered an accident and the truck trailer was damaged during the $2021$ financial year. The truck trailer was impaired by R$40000$ on $31$ December $2021.$ On $1$ April $2022,$ Mint replaced the truck trailer with a new bigger truck trailer. The old truck trailer was sold for R$280000$ cash on $1$ April $2022.$

To enhance the power and fuel economy of its truck body, Mint installed a heavy$-$duty turbo into its engine on $31$ December $2022.$ The total cost to install the turbo amounted to R$120000$ cash paid on that day. This installation is expected to significantly decrease the fuel consumption of the truck body.

There was no change to estimates of the useful lives and residual values of the assets above during the period under review.

Buildings

On $1$ January $2016$ Mint purchased the two floors of a $5-$floor building on Ontdekkers Road $($ground floor and first floor$).$ Mint paid a total of R$2600000$ for the two floors. The total cost of R$2600000$ is split equally between the floors. The floors had an estimated total useful life of $40$ years on $1$ January $2016$ and a nil residual value. These estimates have remained unchanged.

Since $1$ January $2016,$ Mint has used the ground floor of the building as a showroom for its vehicles and to house its offices. The first floor has always been rented out to third parties.

The other three floors of the building are not owned by Mint. One of the floors has been owned by an accounting firm for the last $10$ years. The floors in the building can be sold separately and regularly change ownership. Another of the floors was recently bought by an advertising agency. The top floor is in the process of being sold to a consulting firm.

Parking lot $($Land$)$

Mint purchased a site of land next to the Ontdekkers Road dealership on $1$ February $2019.$ The land was purchased at a cost of R$180000.$ Mint uses the land as a parking lot for its customers and as an additional space for displaying some of its vehicles. The parking lot is undeveloped land and has an unlimited useful life. The parking lot has always been measured on the revaluation model as per IAS $16$ Property, Plant, and Equipment. The parking lot had a carrying value of R$240000$ on $31$ December $2020.$ During the year ended $31$ December $2021,$ a flood resulted in the water table rising, making $50\%$ of the parking lot waterlogged. This meant that only $50\%$ of the parking lot could be used safely.

An impairment test was performed on the parking lot on $31$ December $2021$ and the recoverable amount of the parking lot was found to be R$130000.$

During the year ended $31$ December $2022,$ the water table had dropped such that the rest of the parking lot could again be used safely. On $31$ December $2022,$ the recoverable amount of the parking lot was determined to be R$210000.$

Germiston site

The Germiston dealership consists of a plot of land that Mint is developing for the purpose of building a second dealership. The land is correctly classified as property, plant, and equipment. The land was purchased at a cost of R$120000$ on $1$ January $2022.$ The land was revalued to its fair value of R$145000$ on $31$ December $2022.$

Additional information:

$$ Mint accounts for all its property plant and equipment on the cost model as per IAS $16$ Property, Plant, and Equipment, except for its land which it accounts for on the revaluation model.

$$ Mint accounts for its investment property on the fair value model as per IAS $40$ Investment Property.

$$ Ignore current tax and ignore deferred tax.

$$ Ignore VAT

REQUIRED:

a$)$ Discuss whether Mint Condition Motors $($Pty$)$ Ltd should recognize the expenditure incurred on the installation of the turbo should as an asset $($part of the truck body$)$ on $31$ December $2022.(4$ marks$)$

b$)$Prepare the journal entries required to account for the old truck trailer and the new truck trailer in the books of Mint Condition Motors $($Pty$)$ Ltd for the year ended $31$ December $2022.(7$ marks$)$

$$Dates and narrations are required.

c$)$ Discuss whether the two floors Mint Condition Motors $($Pty$)$ Ltd owns in the Ontdekkers Road building should be classified as property, plant, and equipment, or as investment property as at $31$ December $2022.$