QUESTION ONE $[25]$

MedPharm Limited is a manufacturer of medicinal vaccines. MedPharm has manufacturing

assembly lines in Germany and South Africa. In an effort to help curb the spread of the coronovirus,

they have undertaken to manufacture the approved COVID $19$ vaccines at their plant in South Africa.

They recently purchased a top of the range, more efficient and productive machine specifically for

this purpose of manufacturing the COVID $19$ vaccines. Details of the purchase are below:

$$ The machine was purchased on the $1$ January $2017$ for R$1500000.$

$$ The machine was expected to have a useful life of $10$ years

$$ On date of acquisition, the machine was expected to have a residual of R$50000$

$$ Machinery is depreciated on a straight line basis

$$ On the $1$ January $2019,$ the estimated residual was decreased to R$25000$

The company uses the re$-$allocation method to record changes in accounting estimates.

Required

$1\mathrm{.}1.$ Disclose the $$change in estimate$$ and $$profit before tax$$ notes for the year ended $31$

December $2019.$

$1\mathrm{.}2.$ Provide the journal entries if depreciation based on the old estimate had already been

processed for the current year.