FAC2601
EXAM PACK
, lOMoARcPSD|21997160
6 FAC2601
MAY/JUNE 2025
QUESTION 1 (10 Marks) (20 minutes)
Answer the following multiple-choice questions. Indicate your choice by selecting only ONE
option from the four options given for each question answered.
1. The following list of balances appears, amongst others, in the accounting records of
Shimmo Ltd on 31 December 2024:
R
Ordinary share capital (shares issued at R0,50 each) 5 000 000
Proceeds of 1 500 000 ordinary shares issued on 31 October 2024 1 125 000
The following decision that must still be recorded was ratified by the directors on
31 December 2024:
Capitalisation shares must be issued to the ordinary shareholders that are registered in the
share register on 31 December 2024, in the ratio of one ordinary share for every five ordinary
shares held at R0,65 per share.
Which one of the following options represents the Rand-value of the shares that must
be capitalised?
1. R796 250
2. R1 495 000
3. R845 000
4. R7 475 000 (2)
2. Both the managing director and the chief executive officer of Bossa Ltd have the benefit of the
use of company cars, which may also be used for private purposes. The total benefit for each
director, for the use of the cars, is estimated at R400 000 per year, of which 30% is for private
use and 70% for business purposes.
The total amount that should be disclosed in remuneration, as other benefits, should
be:
1. R120 000
2. R400 000
3. R240 000
4. R560 000 (2)
3. The normal production capacity of an entity is 350 000 units per annum. The raw material cost
is R220 per unit, and direct labour is R250 per unit.
Variable production overheads are R60 per unit and fixed production overheads incurred
amounts to R5 250 000. The closing balance of finished goods is 9 500 units (assume there is
no opening balance).
Which amount is the correct cost of sales figure if the actual production was 280 000
units for the year?
1. R148 400 000
2. R147 422 500
3. R148 472 500
4. R152 600 000 (2)
, lOMoARcPSD|21997160
7 FAC2601
MAY/JUNE 2025
QUESTION 1 (continued)
4. USW Ltd, a manufacturing entity, manufactures specialized, robust cellphone cases for resale.
The manufacturing cost per ton is R900. Finished products are sold for R935 per ton. Sales
expenses amount to R45 per ton, delivery costs amount to R35 per ton, and other directly
associated costs to inventory to make a sale are R25 per ton. Closing inventories on hand at
31 December 2024 amount to 3,500 tons.
The amount that must be used to write down inventories to its net realisable value is:
1. R0
2. R35 000
3. R157 500
4. R245 000 (2)
5. Preference shares, which retain the right to a dividend from year to year, irrespective of
whether a dividend was declared or not during the year, are known as:
1. Ordinary preference shares;
2. Participating preference shares;
3. Non-cumulative preference shares;
4. Cumulative preference shares. (2)
, lOMoARcPSD|21997160
8 FAC2601
MAY/JUNE 2025
QUESTION 2 (55 marks) (110 minutes)
The following information was taken from the financial records of DDP Ltd, who manufacturer unique
off-road caravans for the year ended 31 December 2024:
R
Land at valuation (note 1) ........................................................................................... 3 000 000
Office buildings at cost (31/12/2023 (note 1 and 2) .................................................... -
Motor vehicles at carrying amount (31/12/2023) (note 2 and 3) .................................. 1 575 000
Machinery at cost (31/12/2023) (note 1, 2 and 3) ...................................................... 1 800 000
Furniture and fittings at carrying amount (note 2 and 3) ............................................. 720 000
Accumulated depreciation:
- Motor vehicles (31/12/2023) ................................................................................... 1 050 000
- Machinery (31/12/2023) .......................................................................................... 990 000
Investments at cost (note 5) ........................................................................................ 130 000
Loan (note 6) ............................................................................................................... 93 750
Inventories (note 4) ..................................................................................................... 1 502 500
Trade and other receivables ....................................................................................... 2 352 000
Bank overdraft ............................................................................................................. 630 000
Trade and other payables ........................................................................................... 731 250
Additional information:
The following information in respect of transactions that occurred during the financial year was given:
1. Land and buildings are owner-occupied and consist of erf 14, Sunnyside, with an office building
thereon. The land was acquired on 1 March 2023 for R1 425 000. The office buildings were
erected during the current financial year and have no residual value.
Total costs incurred on the building were as follows:
- Material ....................................................................................................... R1 950 000
- Professional fees ......................................................................................... R525 000
- Labour cost .................................................................................................. R1 125 000
The company withdrew the machinery, listed in the balances above, from production for a
period of 7 months during the year. It was used in the process of erecting the office building.
This machinery was acquired on 1 July 2022 and had no residual value. The building was
completed on 31 October 2024 and was available for use, as intended by management, on the
same date. The land was revalued for the first time on 1 January 2024 at net replacement
value by Mrs. Msiza, an independent sworn appraiser.
2. Other transactions in respect of non-current assets that took place during the current year:
- On 30 June 2024, one of the vehicles was involved in an accident and as a result, it was
written off to zero. This vehicle was purchased on 1 July 2021 and had a cost price of
R225 000. An amount of R187 500 was paid by the insurance company on 25 August
2024 as a reimbursement. On 1 October 2024, a new vehicle costing R337 500 was
purchased, to replace the vehicle that was written off.
- The company bought an additional machine for business on 1 July 2024 at a cost of
R562 500. The machine has an estimated residual value of R37 500 at the end of its useful
life. The machine was ready and available for use, as intended by management, on the
purchase date. This machine requires a major inspection every two years, estimated to
cost R50 000 per inspection. No inspection was done on acquisition, but the separate
component was identified. This machine was not used in the construction of the new office
building.
Downloaded by Thomas Mboya ()
EXAM PACK
, lOMoARcPSD|21997160
6 FAC2601
MAY/JUNE 2025
QUESTION 1 (10 Marks) (20 minutes)
Answer the following multiple-choice questions. Indicate your choice by selecting only ONE
option from the four options given for each question answered.
1. The following list of balances appears, amongst others, in the accounting records of
Shimmo Ltd on 31 December 2024:
R
Ordinary share capital (shares issued at R0,50 each) 5 000 000
Proceeds of 1 500 000 ordinary shares issued on 31 October 2024 1 125 000
The following decision that must still be recorded was ratified by the directors on
31 December 2024:
Capitalisation shares must be issued to the ordinary shareholders that are registered in the
share register on 31 December 2024, in the ratio of one ordinary share for every five ordinary
shares held at R0,65 per share.
Which one of the following options represents the Rand-value of the shares that must
be capitalised?
1. R796 250
2. R1 495 000
3. R845 000
4. R7 475 000 (2)
2. Both the managing director and the chief executive officer of Bossa Ltd have the benefit of the
use of company cars, which may also be used for private purposes. The total benefit for each
director, for the use of the cars, is estimated at R400 000 per year, of which 30% is for private
use and 70% for business purposes.
The total amount that should be disclosed in remuneration, as other benefits, should
be:
1. R120 000
2. R400 000
3. R240 000
4. R560 000 (2)
3. The normal production capacity of an entity is 350 000 units per annum. The raw material cost
is R220 per unit, and direct labour is R250 per unit.
Variable production overheads are R60 per unit and fixed production overheads incurred
amounts to R5 250 000. The closing balance of finished goods is 9 500 units (assume there is
no opening balance).
Which amount is the correct cost of sales figure if the actual production was 280 000
units for the year?
1. R148 400 000
2. R147 422 500
3. R148 472 500
4. R152 600 000 (2)
, lOMoARcPSD|21997160
7 FAC2601
MAY/JUNE 2025
QUESTION 1 (continued)
4. USW Ltd, a manufacturing entity, manufactures specialized, robust cellphone cases for resale.
The manufacturing cost per ton is R900. Finished products are sold for R935 per ton. Sales
expenses amount to R45 per ton, delivery costs amount to R35 per ton, and other directly
associated costs to inventory to make a sale are R25 per ton. Closing inventories on hand at
31 December 2024 amount to 3,500 tons.
The amount that must be used to write down inventories to its net realisable value is:
1. R0
2. R35 000
3. R157 500
4. R245 000 (2)
5. Preference shares, which retain the right to a dividend from year to year, irrespective of
whether a dividend was declared or not during the year, are known as:
1. Ordinary preference shares;
2. Participating preference shares;
3. Non-cumulative preference shares;
4. Cumulative preference shares. (2)
, lOMoARcPSD|21997160
8 FAC2601
MAY/JUNE 2025
QUESTION 2 (55 marks) (110 minutes)
The following information was taken from the financial records of DDP Ltd, who manufacturer unique
off-road caravans for the year ended 31 December 2024:
R
Land at valuation (note 1) ........................................................................................... 3 000 000
Office buildings at cost (31/12/2023 (note 1 and 2) .................................................... -
Motor vehicles at carrying amount (31/12/2023) (note 2 and 3) .................................. 1 575 000
Machinery at cost (31/12/2023) (note 1, 2 and 3) ...................................................... 1 800 000
Furniture and fittings at carrying amount (note 2 and 3) ............................................. 720 000
Accumulated depreciation:
- Motor vehicles (31/12/2023) ................................................................................... 1 050 000
- Machinery (31/12/2023) .......................................................................................... 990 000
Investments at cost (note 5) ........................................................................................ 130 000
Loan (note 6) ............................................................................................................... 93 750
Inventories (note 4) ..................................................................................................... 1 502 500
Trade and other receivables ....................................................................................... 2 352 000
Bank overdraft ............................................................................................................. 630 000
Trade and other payables ........................................................................................... 731 250
Additional information:
The following information in respect of transactions that occurred during the financial year was given:
1. Land and buildings are owner-occupied and consist of erf 14, Sunnyside, with an office building
thereon. The land was acquired on 1 March 2023 for R1 425 000. The office buildings were
erected during the current financial year and have no residual value.
Total costs incurred on the building were as follows:
- Material ....................................................................................................... R1 950 000
- Professional fees ......................................................................................... R525 000
- Labour cost .................................................................................................. R1 125 000
The company withdrew the machinery, listed in the balances above, from production for a
period of 7 months during the year. It was used in the process of erecting the office building.
This machinery was acquired on 1 July 2022 and had no residual value. The building was
completed on 31 October 2024 and was available for use, as intended by management, on the
same date. The land was revalued for the first time on 1 January 2024 at net replacement
value by Mrs. Msiza, an independent sworn appraiser.
2. Other transactions in respect of non-current assets that took place during the current year:
- On 30 June 2024, one of the vehicles was involved in an accident and as a result, it was
written off to zero. This vehicle was purchased on 1 July 2021 and had a cost price of
R225 000. An amount of R187 500 was paid by the insurance company on 25 August
2024 as a reimbursement. On 1 October 2024, a new vehicle costing R337 500 was
purchased, to replace the vehicle that was written off.
- The company bought an additional machine for business on 1 July 2024 at a cost of
R562 500. The machine has an estimated residual value of R37 500 at the end of its useful
life. The machine was ready and available for use, as intended by management, on the
purchase date. This machine requires a major inspection every two years, estimated to
cost R50 000 per inspection. No inspection was done on acquisition, but the separate
component was identified. This machine was not used in the construction of the new office
building.
Downloaded by Thomas Mboya ()
