FAC3702 ASSESSMENT 2 SEM 1 OF 2025 EXPECTED SOLUTIONS

a)


Journal Entries for Reclassification of Administration Property


Date: 1 October 2024
Financial
Account Debit (R) Credit (R)
Statement
Investment Property
3,200,000 SFP
(Land)

, Investment Property
6,500,000 SFP
(Building)
Property, Plant and
2,500,000 SFP
Equipment (Land)
Property, Plant and
3,334,375 SFP
Equipment (Building)
Gain on 3,865,625 SOCI


1. Reclassification at Fair Value:

Land (FV: R3,200,000) and Building (FV: R6,500,000) are derecognized from PPE and recognized as Investment Property.
Carrying amount of Land: R2,500,000 (no depreciation).
Carrying amount of Building: R5,500,000 (cost) – R2,165,625 (accumulated depreciation*) = R3,334,375.
Gain: R9,700,000 (total FV) – R5,834,375 (total carrying amount) = R3,865,625 recognized in SOCI.
Calculation of Accumulated Depreciation (Building):
Annual depreciation = R5,500,000−R550,00020=R247,50020R5,500,000−R550,000=R247,500.
Depreciation from 1 Jan 2016 to 1 Oct 2024 = 8.75 years×R247,500=R2,165,6258.75 years×R247,500=R2,165,625.