FAC2602 ASSIGNMENT 2 SOLUTIONS

FAC2602 – ASSIGNMENT 2
SEMESTER 2 2023




Here's the breakdown of the calculation:

• Other expenses in SunPower Ltd: R500,000

• Other expenses in Hydro Ltd: R400,000

• On 1 September 2020, SunPower Ltd sold machinery to Hydro Ltd at a carrying amount of
R210,000.

• Depreciation is recognized on the machinery at a rate of 20% per annum.

• The machinery was sold on 1 September 2020, and we need to account for the depreciation
from that date to the end of the current year (6/12).

, Here's the breakdown of the calculation:

• Revaluation surplus in SunPower Ltd: R550,000

• Revaluation surplus in Hydro Ltd at the acquisition date: R70,000

• SunPower Ltd acquired a 60% interest in Hydro Ltd on 1 March 2019.

• We calculate the non-controlling interest's share in the revaluation surplus by subtracting the
revaluation surplus at the acquisition date from the total revaluation surplus in Hydro Ltd
and then multiplying by the non-controlling interest's ownership percentage (60%).




This journal entry reflects the depreciation on the machinery that was sold from SunPower Ltd to
Hydro Ltd. Depreciation is recognized for the portion of the year it was owned by Hydro Ltd (6/12) at
a rate of 20%. SunPower Ltd reduces its accumulated depreciation account, and Hydro Ltd recognizes
the corresponding portion of depreciation in its retained earnings account.