FEEDBACK TUTORIAL LETTER TEST 1 SEMESTER FINANCIAL ACCOUNTING 3B [FAC312S]

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Neal Griffin
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1 FEEDBACK TUTORIAL LETTER TEST 1 SEMESTER FINANCIAL ACCOUNTING 3B [FAC312S] 1

2 Question 1 ) Cost of the Production equipment Purchse price 1,025, Delivery costs 30, Instlltion costs 60, Generl dministrtive costs 2 - Costs of testing 3 50, Proceeds from smples 3-5, Initil operting losses 4 - PV of dismntling costs 5 170, ,330, Workings W1 Delyed Price discounted1,127,500/1.1 = 1,025,000 b) Journl entries relting to the impirment of Production equipment 2017 Deprecition 157, Accumulted deprecition 157, Deprecition for the yer recognised (W1) Impirment loss (P&L) 437, Accumulted Impirment (SoFP) 437, Impirment loss recognised due to CA > RA. (W2) 2018 Deprecition 95, Accumulted deprecition 95, Deprecition for the yer recognised (W3) Workings W1 Deprecible mount: production equipment 1,260, ,330,000-70,000 Used for 12 months, TUL: 8 yrs /8yrs Deprecition 157, W2 rying Amount 1,172, ,330, ,500 Recoverble mount (given) 735, thus Impirment loss 437, W3 Deprecition: , (735,000-70,000)/7 c) Disclosure: PPE Recon note for Production equipment 2,017 Gross rying Amount -

3 Accumulted deprecition - Net rying Additions 1,330, Deprecition - 157, Impirment loss - 437, Gross rying Amount 1,330, Accumulted deprecition - 157, Accumulted impirment losses - 437, Net rying ,000.00

4 d) Journl entries to record the revlution of L&B 2018 Deprecition 75, Accumulted deprecition 75, Deprecition for the yer recognised (W1) on building lone. Lnd is not deprecited. Cost 1,800, (6,000,000-4,200,000) Cost 958,995 Accumulted deprecition: Building 52,745 Revlution gin (OCI) 2,706, Revlution gin for the yer recognised (W2) Revlution surplus/reserve 19,180 Retined Ernings 19,180 trnsfer of the revlution gin relting to buildings onlu to retined ernings over the useful life of the sset (W3) W1 Deprecible mount: building 3,750, ,500,000-4,200, ,000 Used for 12 months, TUL: 50 yrs /50yrs Deprecition: , W2 Cost of L&B 8,500, Accumulted deprecition 206, Building only (75,000 p. x 2.75 yrs in use) rying 31/12/18 8,293, Fir vlue(given) 11,000, B: 5,000,000 + L: 6,000,000 Revlution gin 2,706, L: 1,800,000 + B: 906,250 Proportionte resttement: Building only s it hs TUL - Lnd hs indefinite useful life. Fir vlue of Building 5,000, Excluding residul vlue effect ,000/50 x 2.75 yrs Adjusted FV 4,969, "Grossed up" Cost, i.e GRV 5,258,995 Adj.FV x TUL/RUL: 4,969,750x50/47.25 Originl Cost 4,300, thus djustment to Building t cost 958,995 "Grossed up" Accumulted dep 258,995 (5,258, ,000)/50 x 2.75yrs in use Current Acc dep 206, thus djustment to Building t cost 52,745 W3 Trnsfer of buildings reserve 19,180 Blnce on Reserve/RUL: 906,250/47.25 yrs e) Deprecition for delivery vehicles Opening rying Amount 360, given Kilometres used for ,000.00

5 Revised the beginning of ,000 TUL: 920,000 - Used by beginning 2018: 400,000 Deprecition for , ,000 x 60,000kms/(520,000 the strt of 2018) Question 2 ) Which IFRS pplies IAS 40 - Investment Properties b) Clssifiction of Properties listed Propco is property deler. The buildings tht it owns would therefore hve been clssified s inventory. House in the suburbs The house is being refurbished with the intention of lesing it under operting leses. The commencement of the operting lese will constitute evidence of chnge in use the trnsfer will not occur until this dte (i.e. the property will remin ccounted for in terms of IAS 2 Inventory until the commencement of the operting lese) Once the operting lese commences, the house will be reclssified to investment property. Ten-room prtment This is dul use (joint use) property If the first 3 office rooms cn be sold or lesed (in terms of finnce lese) seprtely from the remining 7 rooms, then the first 3 rooms must be clssified s PPE nd the remining 7 rooms must be clssified s investment property. If this is not the cse, since significnt portion (7 out of 10 rooms) is held to ern rentls (i.e. used s investment property), the entire property must be clssified s investment The ncillry services provided re insignificnt. Hd these services been significnt, the office would hve been clssified s PPE. Bonus questions 1. Who is the president of South Afric? Cyril Rmphos 2. Wht is the new proposed rte for VAT in South Afric? 15% 3. Wht is the new tx to be introduced in Nmibi nd t wht rte will it be effected? Dividends tx - t rte of 10% 4. In wht fictionl Africn country is the movie Blck Pnther set? Wknd

FINANCIAL ACCOUNTING 202 [FAC612S]

FEEDBACK TUTORIAL LETTER ASSIGNMENT 1 SECOND SEMESTER 2017 FINANCIAL ACCOUNTING 202 [FAC612S] 1 Feedbck on Tutoril Letter 1- Semester 2: FAC 612 S Question 1: Current Tx nd Deferred Txtion workings nd