Lima Limited is a company operating in the farming sector. The company purchased its only item
of equipment on 2 January 2017 at a cost of N$100 000. During the 2018 financial year, it was
discovered that the equipment purchased in January 2017 was recorded as a repair expense
The profit before depreciation and repair expense amounted to N$2 000 000 for the 2017 financial year and amounted to N$2 500 000 for the 2018 financial year.
The corporate tax rate is 30%. The company provides for depreciation at 10% per annum on a straight line method. The tax authorities allow a wear and tear allowance of 20% per annum also on the straight line basis.
Prepare the correcting journal entries that are processed in the 2018 year (11 marks)