I'IHITIIBIFI UNIVERSITY

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1 - The (a I'IHITIIBIFI UNIVERSITY OF SCIEI'ICE HI'ID TECHI'IOLOGY MANAGEMENT SCIENCES ACCOUNTING DEPARTMENT QUALIFICATION : BACHELOR OF ACCOUNTING AND FINANCE QUALIFICATION CODE: ZBBACF LEVEL: 7 COURSE: FINANCIAL ACCOUNTING 310 COURSE CODE: GFA 7115 DATE: JUNE 2017 SESSION: JUNE 2017 DURATION: 3HRS MARKS: 100 FIRST OPPORTUNITY EXAMINATION QUESTION PAPER EXAMINERIS) ANDREW SIMASIKU KAMOTHO DANIEL MODERATOR: I. VAN RENSBURG THIS QUESTION PAPER CONSISTS OF _5_ PAGES (Excluding this front page) INSTRUCTIONS 1. Answer ALL the questions and in blue or black ink 2. Start each question on a new page in your answer booklet & show all your workings 3. Questions relating to this examination may be raised in the initial 30 minutes after the start of the paper. Thereafter, candidates must use their initiative to deal with any perceived error or ambiguities & any assumption made by the candidate should be clearly stated PERMISSIBLE MATERIALS 1. Examination paper- No study materials are allowed in the examination room 2. Examination script examination script should be handed to the invigilator at the end of the examination session

2 QUESTION 1 Kauta Ltd issued and fully paid share capital on 1St January 2016 comprised: % preference shares of N$100 each ordinary shares of N$100 each On 1St October 2016, Kauta Ltd declared a 1-for-4 rights issue of ordinary shares at N$140 per share. The market price of the ordinary shares was N$ 240 per share. Net profit after tax for the year ended 31St December 2016 was N$ Earnings per share for the year 2015 were N$ Required a) Calculate earnings per share for the year ended 31St December 2016 (20 marks) b) Adjust earnings per share for 2015 (5 marks)

3 QUESTION 2 Martin construction Limited incurs significant finance costs on its financing for the construction of supermarkets. Its chosen accounting policy to date has been to expense the finance costs as incurred. The final accounts for the year ended 31 December 2015 and the 2016 draft accounts reflect this policy and show the following: N$ 000 N$ 000 Profit before interest and tax Finance cost m (fl) Profit before tax Income tax expense (1.9%) (L400) Profit before tax Retained earnings b/f The directors of Martin construction Limited have now decided to change the accounting policy in 2016 to capitalisation of finance costs as per IAS 23. Martin construction limited incurs no finance costs other than those related to the construction of the supermarkets. Martin construction limited paid a dividend of N$ 1 million during the year ended 31 December Show how the change in accounting policy will be reflected in the statement of profit or loss and other comprehensive income, and the statement of changes in equity for the year ended 31 December 2016 (15 marks )

4 (b) During the year 2016, JJK Limited discovered certain items that had been included in the inventory at 31 December 2015 at a value of N$2.5 million but they had been infact sold before the year end. The Statement of profit or loss and other comprehensive income below for JJK for 2015 and 2016 are as follows N$ N$ Sales Cost of sales (33 500) (30 200) Gross profit Tax expense EM ELM Profit/Loss Show the 2016 Statement of profit or loss and other comprehensive income with comparatives after the error has been corrected. (10 marks)

5 QUESTION 3 Beehive limited has a defined benefit plan that pays retirement benefits to all participating employees. Beehive limited contributes to the fund. Employee benefits paid are determined using a formula that incorporates the number of years employed and the salary level of the members upon retirement Details of the fund are as follows N$ Fair value of plan asset at 1St January Fair value of plan asset at 31St December Present value of plan obligation at 1St January Present value of plan obligation at 31St December Actual return on plan asset Current year s service costs Payments made to the fund by company Benefits paid by fund Past service cost Rate on long term high quality corporate bonds 10% (a) Calculate the employee benefit expense to be recognised in profit or loss (b) Calculate the re-measurement of the net defined recognised in other comprehensive income (5 marks) liability /asset to be (4 marks) (0) Prepare the journal entries for the defined benefit plan for the year ended 31 December (16 marks)

6 QUESTION 4 (a) On September 2014 Sugar limited whose financial currency dollar placed an order for inventory with an American supplier The risk and rewards associated with the inventory passed to Sugar is the Namibian for USD limited on 1St December Sugar Limited s year-end is 31 December. Exchange rates 1 September 2015 USD 1 = N$ December 2015 USD 1 = N$ December 2015 USD 1 = N$ March 2016 USD 1 = N$ 8.65 Prepare journal entries to record all matters relating to the acquisition and payment of the inventory assuming that: (i) Payment for the inventory was made on 31 December 2015 (6 marks) (ii) Payment forthe inventory was made on 1 March 2016 ( 8 marks) (b) Discuss the differences between transaction risk, translation risk and economic risk ( 6 marks ) (0) Explain how inflation rates can be used to forecast exchange rates (5 marks) END OF QUESTION PAPER

99 1! I'IFIITIIBIFI UNIVERSITY EXAMINER(S) clearly stated. perceived error or ambiguities & any assumption made by the candidate should be

99 1! I'IFIITIIBIFI UNIVERSITY EXAMINER(S) clearly stated. perceived error or ambiguities & any assumption made by the candidate should be I I'IFIITIIBIFI UNIVERSITY OF SCIENCE nnd TECHI IOLOGY FACULTY OF MANAGEMENT SCIENCES DEPARTMENT OF ACCOUNTING, ECONOMICS AND FINANCE QUALIFICATION: BACHELOR OF TECHNOLOGY IN ACCOUNTING QUALIFICATION CODE: