Summary FAC3761 Assignment 2 2021

FAC3761 ASSIGNMENT 2 OF 2021
QUESTION 1
a) Cost of Makhado Building

R
Purchase cost 7 750 000
Modification costs 1 150 000
8 900 000

Cost of manufacturing equipment

R
Purchase cost (50 000 000 ∗ 0.022) 1 100 000
Delivery fee (100 000 ∗ 0.022) 2 200
Installation costs (800 000 ∗ 0.018) 14 400
Testing (200 000 − 50 000) (150 000)
966 600


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.

, c) Ndzalama Ltd

DR CR
R R
01 January 2018
No journal entry

15 January 2018
Manufacturing Equipment (𝑆𝐹𝑃) 1 100 000
Trade & other payables (𝑆𝐹𝑃) 1 100 000

Manufacturing Equipment (𝑆𝐹𝑃) 2 200
Bank (𝑆𝐹𝑃) 2 200

31 March 2018
Bank (𝑆𝐹𝑃) (200 000 − 14 400 − 50 000) 135 600
Manufacturing Equipment (𝑆𝐹𝑃) 135 600

1 June 2018
Foreign exchange loss (P / L) [(0.024 − 0.022) ∗ 50 000 000 ∗ 50%)] 50 000
Trade & other payables 50 000

Trade & other payables (SFP) (50 000 000 ∗ 50% ∗ 0.024) 600 000
Bank 600 000

30 June 2018
Foreign exchange loss (P / L) [(0.026 − 0.022) ∗ 50 000 000 ∗ 50%)] 100 000
Trade & other payables 100 000

Trade & other payables (SFP) (50 000 000 ∗ 50% ∗ 0.026) 650 000
Bank 650 000