QUESTION TWO $(45$ MARKS$)$

Norbit Ltd purchased machinery on $1$ January $20\mathrm{.}10$ and the machinery is written off over its estimated useful life $($at that stage six years$).$ It is the policy of the enterprise to revalue machinery every two years. On $1$ January $20\mathrm{.}12$ machinery was revalued for the first time by Mr X $,$ an independent sworn appraiser, on a depreciated $($net$)$ replacement value basis with reference to recent market transactions on arm's length. On that date the remaining useful life of all the machinery was estimated to be five years. The residual value of all machinery remains Rnil despite the fact that the useful lives have changed. The following information is available:

Additional information

$1.$ The entity realises revaluation surpluses as the assets are used.

$2.$ The entity discloses all revalued property, plant and equipment on the net replacement value basis.

$3.$ The reduction in the replacement value of machine $\backslash ($ B $\backslash )$ is permanent.

$4.$ A tax allowance is granted on the straight$-$line method over $5$ years.

$5.$ The income tax rate is $\backslash (28\backslash \%\mathrm{.}66,6\backslash \%\backslash )$ of all capital gains are taxable.

$6.$ No decision has in principle been taken to sell the machinery.

$7.$ Assume that all the dates mentioned above are after $1$ October $2001.$

Required

$-$ Disclose all the notes to the financial statements of Norbit Ltd for the year ended $31$ December $20\mathrm{.}12$ which relate to the above$-$mentioned information. Your answer must comply with International Financial Reporting Standards.

$-$ Ignore comparative figures.

$-$ Also disclose the revaluation surplus in the statement of changes in equity.