EXCELCENTRE LEARNING INSTITUTE 061 043 9805
PU E
SHI C
NG Y
OU TO THE GATE OF EXCEL L EN
Education is the most powerful weapon which you can use to change the world
,EXCELCENTRE LEARNING INSTITUTE 061 043 9805
WARNING: PLEASE NOTE THAT PLAGIARISM IS A SERIOUS ACADEMIC
OFFENSE, therefore students must use this document ONLY as a guideline. Hence
students have regenerated their own (personalized) solutions paying particular
attention to module contents as prescribed by module facilitators, lecturers and
supervisors. This document’s purpose is to compact all sources of information that
might be relevant to students’ assignments, hence additional knowledge on the
provided information is not restricted by the authors. However, submitting this
document as one’s final work is considered unethical, and students should be
penalized. If this document is plagiarized by the users and fails, EXCELCENTRE
should not be rendered accountable since the contents in this document only give
learners a kick-start on what is expected of them from their areas of
specialty.CAUTION: STUDENTS ARE NOT MANDATED TO USE EVERY DETAIL IN
THIS DOCUMENT IN WRITING THEIR ASSIGNMENT
Education is the most powerful weapon which you can use to change the world
,EXCELCENTRE LEARNING INSTITUTE 061 043 9805
QUESTION 1 (20 Marks)
Use the information provided to answer the following questions.
1.1.1 Share capital (2020)
compute Total equity (2020)
Formula: Total equity = Total equity & liabilities − Total liabilities
Total liabilities = Non-current liabilities + Current liabilities
Non-current liabilities (2020) = 92 802
Current liabilities (2020) = 46 035
Total liabilities (2020) = 92 802 + 46 035 = 138 837.
Total equity (2020) = 315 633 − 138 837 = 176 796
compute Share capital (2020)
Formula: Share capital = Total equity − Retained income
Retained income (2020) = 74 464
Share capital (2020) = 176 796 − 74 464 = 102 332
Assumptions made for this calculation
Equity is composed only of share capital and retained income: there are no other
equity reserves (share premium, revaluation reserve, foreign currency translation
reserve, other comprehensive income reserves) presented in the extract or material
to the total. If such reserves exist and are material, the share capital computed here
would actually be Total equity − (retained income + other reserves).
1.1.2 Investment income (2020)
Education is the most powerful weapon which you can use to change the world
, EXCELCENTRE LEARNING INSTITUTE 061 043 9805
Identify the relationship between SCI line items
Profit before tax = Operating profit + Investment income − Interest expense
Rearranged to isolate Investment income:
Investment income = Profit before tax − Operating profit + Interest expense
substitute numbers
Operating profit (2020) = 65 802.
Interest expense (2020) = 17 634.
Profit before tax (2020) = 52 284.
Investment income = 52 284 − 65 802 + 17 634
= (52 284 − 65 802) + 17 634
= (−13 518) + 17 634 = 4 116.
1.2 Did investments outside the company increase?
Approach used (because investments are not shown directly): treat investments
as a residual within non-current assets after accounting for other identifiable non-
current assets (land, motor vehicles, plant & equipment). This is a common exam
approach when investment line is not explicitly shown.
compute non-current assets (2020 & 2019)
Non-current assets (2020) = Total assets (2020) − Current assets (2020).
Total assets (2020) = Total equity & liabilities = 315 633.
Current assets (2020) = 84 399.
Non-current assets (2020) = 315 633 − 84 399 = 231 234.
Education is the most powerful weapon which you can use to change the world
PU E
SHI C
NG Y
OU TO THE GATE OF EXCEL L EN
Education is the most powerful weapon which you can use to change the world
,EXCELCENTRE LEARNING INSTITUTE 061 043 9805
WARNING: PLEASE NOTE THAT PLAGIARISM IS A SERIOUS ACADEMIC
OFFENSE, therefore students must use this document ONLY as a guideline. Hence
students have regenerated their own (personalized) solutions paying particular
attention to module contents as prescribed by module facilitators, lecturers and
supervisors. This document’s purpose is to compact all sources of information that
might be relevant to students’ assignments, hence additional knowledge on the
provided information is not restricted by the authors. However, submitting this
document as one’s final work is considered unethical, and students should be
penalized. If this document is plagiarized by the users and fails, EXCELCENTRE
should not be rendered accountable since the contents in this document only give
learners a kick-start on what is expected of them from their areas of
specialty.CAUTION: STUDENTS ARE NOT MANDATED TO USE EVERY DETAIL IN
THIS DOCUMENT IN WRITING THEIR ASSIGNMENT
Education is the most powerful weapon which you can use to change the world
,EXCELCENTRE LEARNING INSTITUTE 061 043 9805
QUESTION 1 (20 Marks)
Use the information provided to answer the following questions.
1.1.1 Share capital (2020)
compute Total equity (2020)
Formula: Total equity = Total equity & liabilities − Total liabilities
Total liabilities = Non-current liabilities + Current liabilities
Non-current liabilities (2020) = 92 802
Current liabilities (2020) = 46 035
Total liabilities (2020) = 92 802 + 46 035 = 138 837.
Total equity (2020) = 315 633 − 138 837 = 176 796
compute Share capital (2020)
Formula: Share capital = Total equity − Retained income
Retained income (2020) = 74 464
Share capital (2020) = 176 796 − 74 464 = 102 332
Assumptions made for this calculation
Equity is composed only of share capital and retained income: there are no other
equity reserves (share premium, revaluation reserve, foreign currency translation
reserve, other comprehensive income reserves) presented in the extract or material
to the total. If such reserves exist and are material, the share capital computed here
would actually be Total equity − (retained income + other reserves).
1.1.2 Investment income (2020)
Education is the most powerful weapon which you can use to change the world
, EXCELCENTRE LEARNING INSTITUTE 061 043 9805
Identify the relationship between SCI line items
Profit before tax = Operating profit + Investment income − Interest expense
Rearranged to isolate Investment income:
Investment income = Profit before tax − Operating profit + Interest expense
substitute numbers
Operating profit (2020) = 65 802.
Interest expense (2020) = 17 634.
Profit before tax (2020) = 52 284.
Investment income = 52 284 − 65 802 + 17 634
= (52 284 − 65 802) + 17 634
= (−13 518) + 17 634 = 4 116.
1.2 Did investments outside the company increase?
Approach used (because investments are not shown directly): treat investments
as a residual within non-current assets after accounting for other identifiable non-
current assets (land, motor vehicles, plant & equipment). This is a common exam
approach when investment line is not explicitly shown.
compute non-current assets (2020 & 2019)
Non-current assets (2020) = Total assets (2020) − Current assets (2020).
Total assets (2020) = Total equity & liabilities = 315 633.
Current assets (2020) = 84 399.
Non-current assets (2020) = 315 633 − 84 399 = 231 234.
Education is the most powerful weapon which you can use to change the world
