FAC1601
ASSIGNMENT 2 SEMESTER 1 2025
UNIQUE NO.
DUE DATE: 2025
, FAC1601
Assignment 2 Semester 1 2025
Unique Number:
Due Date: 2025
Financial Accounting and Reporting
Question 1
Which of the following statements is correct?
1. When revaluing an asset or liability in terms of a change in ownership structure,
the current account is used. The current account is then closed off to the
accounts of the existing partners according to their existing profit-sharing ratio.
2. The selling price of a partnership is determined by the cost price of the
partnership.
3. A personal transaction is a transaction that is made between an existing partner
and the partnership of the business entity.
4. Goodwill is excluded in the calculation when determining the fair value of a
partnership.
5. Past financial performance indicators such as total comprehensive income in
respect of previous financial periods are ordinarily used to determine goodwill.
Correct Answer: Option 3
Explanation:
Option 3 is correct. A personal transaction refers to a transaction between an
existing partner and the partnership itself.
Option 1 is incorrect. The capital account, not the current account, is used
when revaluing assets or liabilities during a change in ownership.
, Option 2 is incorrect. The selling price is usually based on fair value, not cost
price.
Option 4 is incorrect. Goodwill is generally included in the fair value
calculation.
Option 5 is incorrect. Although past financial performance may be considered,
goodwill is not typically based solely on total comprehensive income.
Question 2
Vogel and Mazibuko are in a mining partnership with a profit-sharing ratio of 1:3,
respectively. A new partner, Malikane, is admitted and receives a 1/6 share in the
profits/losses of the new partnership. Vogel and Mazibuko agreed to relinquish
the 1/6 share according to their existing profit-sharing ratio of 1:3. What is the
new profit-sharing ratio?
1. 3 : 13 : 2
2. 5 : 15 : 4
3. 8 : 16 : 5
4. 1 : 3 : 6
5. 7 : 18 : 6
Correct Answer: Option 2
Explanation:
Malikane receives 1/6 of the new partnership's profit.
Vogel and Mazibuko’s original ratio is 1:3, or 1/4 and 3/4 respectively.
They give up 1/6 share proportionally:
o Vogel gives up (1/6 × 1/4) = 1/24
o Mazibuko gives up (1/6 × 3/4) = 3/24
Vogel’s new share = (1/4 - 1/24) = 5/24
ASSIGNMENT 2 SEMESTER 1 2025
UNIQUE NO.
DUE DATE: 2025
, FAC1601
Assignment 2 Semester 1 2025
Unique Number:
Due Date: 2025
Financial Accounting and Reporting
Question 1
Which of the following statements is correct?
1. When revaluing an asset or liability in terms of a change in ownership structure,
the current account is used. The current account is then closed off to the
accounts of the existing partners according to their existing profit-sharing ratio.
2. The selling price of a partnership is determined by the cost price of the
partnership.
3. A personal transaction is a transaction that is made between an existing partner
and the partnership of the business entity.
4. Goodwill is excluded in the calculation when determining the fair value of a
partnership.
5. Past financial performance indicators such as total comprehensive income in
respect of previous financial periods are ordinarily used to determine goodwill.
Correct Answer: Option 3
Explanation:
Option 3 is correct. A personal transaction refers to a transaction between an
existing partner and the partnership itself.
Option 1 is incorrect. The capital account, not the current account, is used
when revaluing assets or liabilities during a change in ownership.
, Option 2 is incorrect. The selling price is usually based on fair value, not cost
price.
Option 4 is incorrect. Goodwill is generally included in the fair value
calculation.
Option 5 is incorrect. Although past financial performance may be considered,
goodwill is not typically based solely on total comprehensive income.
Question 2
Vogel and Mazibuko are in a mining partnership with a profit-sharing ratio of 1:3,
respectively. A new partner, Malikane, is admitted and receives a 1/6 share in the
profits/losses of the new partnership. Vogel and Mazibuko agreed to relinquish
the 1/6 share according to their existing profit-sharing ratio of 1:3. What is the
new profit-sharing ratio?
1. 3 : 13 : 2
2. 5 : 15 : 4
3. 8 : 16 : 5
4. 1 : 3 : 6
5. 7 : 18 : 6
Correct Answer: Option 2
Explanation:
Malikane receives 1/6 of the new partnership's profit.
Vogel and Mazibuko’s original ratio is 1:3, or 1/4 and 3/4 respectively.
They give up 1/6 share proportionally:
o Vogel gives up (1/6 × 1/4) = 1/24
o Mazibuko gives up (1/6 × 3/4) = 3/24
Vogel’s new share = (1/4 - 1/24) = 5/24
