FAC3762
, QUESTIONS:
QUESTION 1:
a) Disclose the plant and the lease in the notes to the annual financial statements of Plastico Ltd for the year ended 31
December 2020. (44 Marks)
b) Present the effects of the investment in the shares of Multico Ltd for the financial year ended 31 December 2020 of
Plastico Ltd in the extracts of: (7 Marks)
- the statement of profit or loss and other comprehensive income; and
- the statement of financial position.
c) Discuss in terms of IFRS 16 Leases, the initial measurement of the lease agreement in the accounting records of MIT
Ltd on 1 May 2020. (9 Marks)
Your discussion must include all relevant calculations.
1.
,QUESTION 2:
a) Prepare the pro-forma journal entries that the Milly Group will process for the following transactions that occurred
during the 2021 financial year. (12 Marks)
- The sale of machinery to Milly Ltd from Dapper Ltd
- The sale of inventory to Milly Ltd from Mask (Pty) Ltd
b) Prepare consolidated statement of profit and loss and other comprehensive income of the Milly Group for the year
ended 28 February 2021. (22 Marks)
c) Discuss the impact the sale transaction on 9 September 2021 will have on the Milly Group. Your discussion should
include how the Milly Group will account for this transaction in the 2022 financial year. (5 Marks)
2.
, SOLUTION:
QUESTION 1:
a) Notes to the annual statements of Plastics Ltd for the year ended 31 December 2020
1. Profit before tax
Profit before tax is stated after taking the following into account
R
Depreciation 53,290.00
Total depreciation [109,430.00 (C1) + 39,611.00 (C2)] 149,041.00
Depreciation capitalised (95,751.00)
Net Finance Cost 20,720.00
Finance cost 20,720.00
Total interest expense [91,067.00 (C1) + 105,787.00 (C2)] 196,854.00
Interest expense capitalized [80,244.00 (C1) + 95,890.00 (C2)] (176,134.00)
Finance Income -
Total interest income 18,546.00
Interest income capitalized (18,546.00)
2. Property, plant & equipment
Carrying amount at beginning of year -
Cost -
Accumulated Depreciation -
Additions at cost 4,500,000.00
Interest capitalized [80,244.00 (C1) + 77,344.00 (C2)] 157,588.00
Depreciation capitalized (C1) 95,751.00
Depreciation for the year (C2) (39,611.00)
Carrying amount at end of year 4,713,728.00
Cost 4,753,339.00
Accumulated Depreciation (39,611.00)
3. Leases
3.1. Right-of-use assets
R
Carrying amount at beginning of year -
Additions (C1) 984,869.00
Depreciation for the year (C1) (109,430.00)
Carrying amount at end of year 875,439.00
3.
, QUESTIONS:
QUESTION 1:
a) Disclose the plant and the lease in the notes to the annual financial statements of Plastico Ltd for the year ended 31
December 2020. (44 Marks)
b) Present the effects of the investment in the shares of Multico Ltd for the financial year ended 31 December 2020 of
Plastico Ltd in the extracts of: (7 Marks)
- the statement of profit or loss and other comprehensive income; and
- the statement of financial position.
c) Discuss in terms of IFRS 16 Leases, the initial measurement of the lease agreement in the accounting records of MIT
Ltd on 1 May 2020. (9 Marks)
Your discussion must include all relevant calculations.
1.
,QUESTION 2:
a) Prepare the pro-forma journal entries that the Milly Group will process for the following transactions that occurred
during the 2021 financial year. (12 Marks)
- The sale of machinery to Milly Ltd from Dapper Ltd
- The sale of inventory to Milly Ltd from Mask (Pty) Ltd
b) Prepare consolidated statement of profit and loss and other comprehensive income of the Milly Group for the year
ended 28 February 2021. (22 Marks)
c) Discuss the impact the sale transaction on 9 September 2021 will have on the Milly Group. Your discussion should
include how the Milly Group will account for this transaction in the 2022 financial year. (5 Marks)
2.
, SOLUTION:
QUESTION 1:
a) Notes to the annual statements of Plastics Ltd for the year ended 31 December 2020
1. Profit before tax
Profit before tax is stated after taking the following into account
R
Depreciation 53,290.00
Total depreciation [109,430.00 (C1) + 39,611.00 (C2)] 149,041.00
Depreciation capitalised (95,751.00)
Net Finance Cost 20,720.00
Finance cost 20,720.00
Total interest expense [91,067.00 (C1) + 105,787.00 (C2)] 196,854.00
Interest expense capitalized [80,244.00 (C1) + 95,890.00 (C2)] (176,134.00)
Finance Income -
Total interest income 18,546.00
Interest income capitalized (18,546.00)
2. Property, plant & equipment
Carrying amount at beginning of year -
Cost -
Accumulated Depreciation -
Additions at cost 4,500,000.00
Interest capitalized [80,244.00 (C1) + 77,344.00 (C2)] 157,588.00
Depreciation capitalized (C1) 95,751.00
Depreciation for the year (C2) (39,611.00)
Carrying amount at end of year 4,713,728.00
Cost 4,753,339.00
Accumulated Depreciation (39,611.00)
3. Leases
3.1. Right-of-use assets
R
Carrying amount at beginning of year -
Additions (C1) 984,869.00
Depreciation for the year (C1) (109,430.00)
Carrying amount at end of year 875,439.00
3.
