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FAC3761 ASSIGNMENT 2
- Institution
- University Of South Africa (Unisa)
FAC3761 ASSIGNMENT 2 - Detailed Assignment (Questions & Detailed Answers)
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By: phathiswakoyo • 3 year ago
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FAC3761, QUESTIONS:
QUESTION 1:
a) In terms of International Financial Reporting Standards, discuss the cost at which Ndzalama Ltd should recognise:
- The Makhado building and (2 Marks)
- The Manufacturing equipment. (6 Marks)
Support your discussion with calculations.
b) Write a memorandum, addressed to the Chief Financial Officer, explaining the correct accounting treatment of the
exchange transaction entered into by Ndzalama Ltd on 1 May 2021, in their accounting records, for the year ended 30
June 2021. (4 Marks)
c) Prepare the journal entries (including cash transactions but excluding depreciation) relevant to the dates indicated
below, in the accounting records of Ndzalama Ltd, for the year ended 30 June 2018 to account for the manufacturing
equipment purchased and the related foreign creditors account: (15 Marks)
- 01 January 2018,
- 15 January 2018,
- 31 March 2018,
- 1 June 2018 and
- 30 June 2018.
d) Disclose the following notes to the annual financial statements of Ndzalama Ltd for the year ended 30 June 2021:
Property, plant, and equipment (total column not required) (20 Marks)
Deferred tax (excluding the exchanged packaging equipment and the cold storage delivery
vehicle) (11 Marks)
1.
,QUESTION 2:
a) Draft a memorandum, addressed to the Chief Financial Officer of Vhurivhuri Ltd, advising on the correct accounting
treatment of the revenue transactions 1 to 3. (23 Marks)
Support your discussion with calculations
b) Disclose the following notes to the annual financial statements of Vhurivhuri Ltd for the year ended 31 March 2021:
- Prior period error (9 Marks)
Ignore tax implications.
- Investment property (4 Marks)
Comparative information is not required.
c) Discuss the appropriate accounting treatment and disclosure of the claim against Vhurivhuri Ltd for the year ended 31
March 2021. (6 Marks)
2.
, SOLUTION:
QUESTION 1:
a) Cost of Makhado Building:
R
Purchase cost 7,750,000.00
Modification costs 1,150,000.00
8,900,000.00
Cost of manufacturing equipment:
Purchase cost (50,000,000.00 x 0.022) 1,100,000.00
Delivery fee (100,000.00 x 0.022) 2,200.00
Installation costs (800,000.00 x 0.018) 14,400.00
Testing (200,000.00 - 50,000.00) (150,000.00)
966,600.00
b) To: Chief Financial Officer
From:
Date:
Subject:
Packaging equipment of the company was exchanged with cold storage delivery
vehicle. The transaction was deemed to have commercial substance.
When the fair values of both the acquired asset and the asset given up can be measured reliably, then the fair
value of the asset given up is used to measure the cost of the asset received unless the fair value of the asset
received is more evident, in which case it can be used; and If the fair values of both assets could not be
determined, the cost was going to be the carrying amount of the asset given up.
Conclusion
Since the fair value of the packaging equipment given up is available, the cost of the cold storage delivery vehicle is
R3,000,000.00.
3.
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