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CONTENTS

1 INTRODUCTION AND WELCOME ................................................................................................ 3

2 PURPOSE OF AND OUTCOMES FOR THE MODULE ................................................................ 4

2.1 Purpose .......................................................................................................................................... 4 2.2 Outcomes ....................................................................................................................................... 4

3 LECTURERS AND CONTACT DETAILS ...................................................................................... 4

3.1 Lecturers ......................................................................................................................................... 4 3.2 Department ..................................................................................................................................... 5 3.3 University ........................................................................................................................................ 6

4 MODULE RELATED RESOURCES............................................................................................... 6

4.1 Study material ................................................................................................................................. 6 4.2 Prescribed books ............................................................................................................................ 7 4.3 Financial calculator ......................................................................................................................... 7 4.4 Recommended books ..................................................................................................................... 7 4.5 Electronic Reserves (e-Reserves) .................................................................................................. 7

5 STUDENT SUPPORT SERVICES FOR THE MODULE ................................................................ 7

6 MODULE SPECIFIC STUDY PLAN ............................................................................................. 11

7 MODULE PRACTICAL WORK AND WORK INTEGRATED LEARNING ................................... 13

8 ASSESSMENT ............................................................................................................................. 13

8.1 Assessment plan .......................................................................................................................... 13 8.2 General assignment numbers ....................................................................................................... 14 8.2.1 Unique assignment numbers and due dates of assignments ....................................................... 15 8.3 Submission of assignments .......................................................................................................... 15 8.4 Assignments ................................................................................................................................. 16

9 OTHER ASSESSMENT METHODS ............................................................................................. 62

10 EXAMINATIONS .......................................................................................................................... 62

11 FREQUENTLY ASKED QUESTIONS .......................................................................................... 62

12 CONCLUSION ............................................................................................................................. 59

13 ANNEXURE A: ASSUMED KNOWLEDGE ................................................................................. 60

Please note / important notes:

FAC2601/101

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1 INTRODUCTION AND WELCOME Dear Student 1. INTRODUCTION

We are pleased to welcome you to this module, FAC2601 of the Accounting 2 course, and hope that you will find it both interesting and rewarding. We will do our best to make your study of this module successful. You will be well on your way to success if you start studying early in the semester and resolve to do the assignment(s) properly.

The semester that you register for will be indicated on your registration papers when you register. Ensure that you are registered for the correct semester as you are obliged to write the examination for that semester (first or second semester). The examination for the first semester will be during May and the examination for the second semester will be during October.

You will receive a number of tutorial letters during the semester. A tutorial letter is our way of communicating with you about teaching, learning and assessment.

This tutorial letter contains important information about the scheme of work, resources and assignments for this module. We urge you to read it carefully and to keep it at hand when working through the study material, preparing the assignment(s), preparing for the examination and addressing questions to your lecturers.

Please read Tutorial Letter 301 in combination with this tutorial letter as it gives you an idea of generally important information when studying at a distance and within a particular college.

In this tutorial letter (101), you will find the assignments and assessment criteria as well as instructions on the preparation and submission of the assignments. It also provides all the information you need with regard to the prescribed study material and other resources and how to obtain them. Please study this information carefully and make sure that you obtain the prescribed material as soon as possible.

We have also included certain general and administrative information about this module. Please study this section of the tutorial letter carefully. This can be included in Tutorial Letter 301, which is specific to each college.

Right from the start we would like to point out that you must read all the tutorial letters you receive during the semester immediately and carefully, as they always contain important and sometimes urgent information.

Should you be faced with specific subject content problems in your studies, please do not hesitate to consult us, your lecturers, by letter, e-mail, telephone or personally (by appointment).

We hope that you will enjoy this module and wish you all the best!

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2 PURPOSE OF AND OUTCOMES FOR THE MODULE 2.1 Purpose Welcome to the FAC2601 module of your studies with the Department of Financial

Accounting of Unisa.

The purpose of this module is to provide learners with knowledge and skills to enable them to draw up the annual financial statements of companies in accordance with the requirements of the Companies Act and certain statements of Generally Accepted Accounting Practice.

2.2 Outcomes Please refer to your study guide for the evaluation criteria for each study unit. 3 LECTURER AND CONTACT DETAILS 3.1 Lecturers

The addresses for communication with the University appear in the brochure: My studies @ Unisa which you have received together with your tutorial matter. You may contact your lecturers in the following ways: Mr G J Steyn: Room 2-33, AJH vd Walt building Mr C Els: Room 2-24, AJH vd Walt building Mr F Montgomery: Room 2-31, AJH vd Walt building Mr C Mkefa: Room 2-40, AJH vd Walt building Telephone number for all above lecturers: (012) 429-4238 E-mail address for semester 1 and 2: [email protected] Personal visits To avoid any disappointment, make an appointment with a lecturer as they may not always be readily available due to other commitments.

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3.2 Department Written correspondence Address all correspondence to: FOR ATTENTION: (Name of lecturer or module number) The Head of the Department Department of Financial Accounting P O Box 392 UNISA 0003 PLEASE NOTE: Letters to lecturers may NOT be enclosed with or inserted into assignments. The following member of staff may be contacted when in need of any administration assistance in the department: Mrs D Kruger By telephone (012) 429-4596 Room 2-25, AJH vd Walt Building

Fax number: (012) 429-3335 Address: Department of Financial Accounting

University of South Africa P O Box 392 UNISA 0003

Ensure that your return addresses/numbers are included in your enquiries. Always have your student number at hand when contacting the University. All queries that are not of a purely administrative nature but are about the content of this module should be directed to the lecturers. Please have your study material with you when you contact us. College of Economic and Management Sciences Information Coordinator: Portia Ngcobo Tel: (012) 429-3925 E-mail: [email protected]

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3.3 University Communication with the University If you need to contact the University about matters not related to the content of this module, please consult the publication My studies @ Unisa that you received with your study material. This brochure contains information on how to contact the University (e.g. to whom you can write for different queries, important telephone and fax numbers, addresses and details of the times certain facilities are open). Always have your student number at hand when you contact the University. How can students contact Unisa: • Unisa website: http://www.unisa.ac.za and http://mobi.unisa.ac.za.

All study related information is now available. • myUnisa: http://myunisa.ac.za and http://myunisa.ac.za/portal/pda.

Students can access their own information. • E-mail: [email protected].

Students may send an e-mail for information on how to contact Unisa via e-mail.

• Sms: 32695 (only for students in South Africa) Students may send a sms for more information on how to contact

Unisa via sms. The sender will receive an auto response sms with the various sms options. The cost to the student per sms is R1.

• Fax: (012) 429-4150 Students will be able to fax their enquiries, where after it will be

distributed to and processed by the relevant department. 4 MODULE RELATED RESOURCES 4.1 Study material

The study material for this module entails the following: Supplied by UNISA

• One study guide. • A number of tutorial letters which you will receive during the semester. This tutorial matter will not necessarily be available at the time of registration. Such tutorial matter will be dispatched to students as it becomes available (for instance, feedback on assignments). If you have access to the internet, you can view the study guides and tutorial letters for the modules for which you are registered on the university’s online campus, myUnisa, at http://my.unisa.ac.za. For enquiries about tutorial matter not received please sent an e-mail to [email protected] or send an SMS to 43579. Please do not contact the lecturers about tutorial matter not received.

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When you enrolled, you received, in addition to the available tutorial matter, an “INVENTORY FOR THE CURRENT ACADEMIC SEMESTER”. Check the tutorial matter you have received against this inventory. You should have received all the items specified in the inventory unless there is an explicit statement to the contrary (eg out of stock). If any of the items are missing, follow the instructions on the back of the inventory.

Use only the telephone number given in the inventory for enquiries about missing tutorial matter.

Please take note: The examination papers of previous semesters are not available to students.

4.2 Prescribed books

The prescribed book for this module is: Introduction to IFRS (latest edition) by Oberholster et al, Lexis Nexis, Durban (www.lexisnexis.co.za). Please consult the list of official booksellers and their addresses in the information brochure, My studies @ Unisa which you have received together with your tutorial matter. If you have any difficulties with obtaining books from these book shops or for more information contact the Prescribed book section at (012) 429-4152 or at the following e-mail: [email protected].

4.3 Financial calculator The acquisition of a financial calculator is compulsory for this module, as it will be used

extensively to perform certain calculations in some of the topics. We can recommend both the HP 10 B II and Sharp EL-738 for these purposes.

4.4 Recommended books There are no recommended books for this module. 4.5 Electronic Reserves (e-Reserves) There are no electronic reserves for this module. 5 STUDENT SUPPORT SERVICES FOR THE MODULE Important information appears in your my Studies @ Unisa brochure.

For information on the various student support systems and services available at Unisa (e.g. student counselling, tutorial classes, language support), please consult the publication My studies @ Unisa, which you received with your study material.

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5.1 Contact with fellow students 5.1.1 Study groups

It is advisable to have contact with fellow students. One way to do this is to form study groups. The addresses of students in your area may be obtained from the following department: Directorate: Student Administration and Registration PO Box 392 UNISA 0003

5.1.2 myUnisa If you have access to a computer that is linked to the internet, you can quickly access resources and information at the university. The myUnisa learning management system is Unisa's online campus that will help you to communicate with your lecturers, with other students and with the administrative departments of Unisa – all through the computer and the internet. To go to the myUnisa website, start at the main Unisa website, http://www.unisa.ac.za, and then click on the “Login to myUnisa” link on the right-hand side of the screen. This should take you to the myUnisa website. You can also go there directly by typing in http://my.unisa.ac.za. Please consult the publication My studies @ Unisa, which you received with your study material, for more information on myUnisa.

5.1.3 Tutor information

REGION: PHYSICAL ADDRESS

CONTACT DETAILS: TUTORIAL SERVICES

NORTH-EASTERN POLOKWANE 23A Landros Mare’ Street Polokwane, 0742

(015) 290-3417 (015) 290-3443

NELSPRUIT Standard Bank Centre: 1st Floor 31 Brown Street Nelspruit, 1201

(013) 755-2476

MIDDELBURG Cnr Church & Bhimy Damane Street Town Square Building Ground Floor Middelburg, 1050

(013) 282-4115

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REGION: PHYSICAL ADDR


GAUTENG THUTONG (Sunnyside) Tutorial Services Office Building 14, Room 2.40 Unisa Sunnyside Campus Cnr Walker and Joubert Street

(012) 441-5751 (012) 441-5750

JOHANNESBURG Tutorial Services Office Old JSE Annekes Building 1 Kerk Street Johannesburg, 2000

(011) 630-4541 (011) 630-4517

FLORIDA Tutorial Services Office Cnr Christiaan de Wet and Pioneer Ave F-Block, Florida

(011) 471-2082 (011) 471-2298

BENONI Unisa Ekurhuleni Regional Service Centre Cnr R51 and Brazil Street Daveyton

(011) 845-9306/00

VAAL Sedibeng College Premises No.6 Frikkie Meyer BLVD Vanderbijlpark, 1911

(016) 931-9979/9883

KWA-ZULU NATAL DURBAN Tutorial Services Office Unisa Kwa-Zulu Natal Boland Bank Building, Durban Tutorial Services Office Unisa Kwa-Zulu Natal Room 1b5, Ground Floor, Stanger Street Campus, Durban

(031) 332-2202 (031) 335-8112

also Richards Bay, Empangeni & Mbizana

PIETERMARITZBURG Tutorial Services Office Reid Building (top floor, room 22), 1 Langalibalele Street Pietermaritzburg, 3201

(033) 355-1734 (033) 355-1735

NEWCASTLE Tutorial Services Office Cnr Sutherland and Harding Street Newcastle, 2940

(031) 335-8127 (034) 326-3105

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REGION: PHYSICAL ADDR


CAPE COASTAL PAROW Tutorial Services Office 15 Jean Simonis Street, Parow, 7499

(021) 936-4190 (021) 936-4121

GEORGE Tutorial Services Office 129 Mitchell Street, George, 6529

(044) 884-1300

MTHATHA Tutorial Services Office 32 Cnr Victoria and York Rd Street Economic Affairs Building Umtata, 5100

(047) 531-5002/6 also Lusikisiki and Mt Frere

EAST LONDON Tutorial Services Office 10 St Lukes Road, Southernwood East London, 5201

(043) 743-9246 also King Williams Town

PORT ELIZABETH Tutorial Services Office Cnr of Cape, Greyville and Ring Roads Green Acres Port Elizabeth, 6045

(041) 363-1070

MIDLANDS MAFIKENG Tutorial Services Office 29 Main Street Opposite ABSA Bank Mafikeng, 2745

(018) 381-6617/7318

RUSTENBURG Tutorial Services Office Forum Building (1st Floor) Cnr OR Tambo and Steen Street Rustenburg, 0300

(014) 594-8800/8856

POTCHEFSTROOM Tutorial Services Office 20 Auret Street Potchefstroom, 2531

(018) 294-3362/3341

KIMBERLEY Tutorial Services Office Shop 3, Liberty Life Building Chapel Street Kimberley, 8301

(053) 832-6391

BLOEMFONTEIN Tutorial Services Office NRE House, 161 Zastron Street Bloemfontein, 9301

(051) 411-0455 (051) 411-0465

KROONSTAD Tutorial Services Office NFS Building, 1st floor 36 Brand Street, Kroonstad, 9500

(056) 213-2053/4

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6 MODULE SPECIFIC STUDY PLAN Use your my Studies @ Unisa brochure for general time management and planning skills. Your studies should progress smoothly if you work as follows: 6.1 Work through ANNEXURE A (Assumed knowledge) and study the contents if necessary. 6.2 Study the relevant study units of the Study Guide for assignment 01, (use the suggested

study programme). 6.3 Do the first exercise (for each study unit) in the Study Guide, without referring to the

solution. Mark your answer in conjunction with the solution in the Study Guide. Ascertain why, when, where, how your answer differs from that of the solution. If you do not get more than 70% for the exercise (use your own marking scheme), do the next exercise and mark it. Study the study unit again. Do the previous exercise(s) again until you get at least 70% per exercise. This may require much more time, but it will ensure that you know and understand the contents of the study material.

6.4 Complete the compulsory assignment 01 by coding the mark-reading sheet (make a copy

for yourself) and send it to UNISA for marking. This will ensure admission to the examination. The submission of assignment 02 (mark-reading sheet) is also compulsory and has a 5% effect on the examination marks but no effect on admission. Assignment 01 and 02 can also be submitted via myUnisa. To submit an assignment via myUnisa: • Go to myUnisa. • Log in with your student number and password. • Select the module from the orange bar (FAC2601). • Click on assignments in the left menu. • Click on the assignment number you want to submit. • Follow the instructions.

6.5 After completing/submitting assignment 01, carry on with the study programme. Do not wait

for the suggested solution or for the return of the marked assignment. Remember: time is limited! The suggested solutions of all the assignments are dispatched to all the students irrespective of whether you have submitted the assignments for marking.

6.6 Mark your assignment by using the suggested solution which will be dispatched to you on

the due date. The solutions will also be placed on the myUnisa system of UNISA’s webpage (www.unisa.ac.za). If your answer differs from the suggested solution, make sure that you understand the reason why – contact a lecturer if you are stuck.

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6.7 General remarks Assignments should be addressed to: The Registrar PO Box 392 UNISA 0003 You may submit written assignments and assignments done on mark-reading sheets either by post or electronically via myUnisa. Assignments may not be submitted by fax or email. For detailed information and requirements as far as assignments are concerned, see the brochure My studies @ Unisa, which you received with your study material. Proposed Study Programme for 2013 Experience has shown that students often fail to plan their studies properly so as to achieve specific study goals at predetermined dates. This leads to a haphazard approach to their studies and the use of ineffective study techniques. We are of the opinion that the restructuring of the module content into shorter study units which should be completed in accordance with a well-planned programme, will greatly assist students in making a success of their studies. We assume the following: That your studies should commence towards the end of January (first semester) and middle of July (second semester) and that the full module should be completed by approximately the end of April (first semester) and September (second semester). This will leave sufficient time for revision. Study programme: First semester – 2013

Assignment Date Study unit Due date 01

02

03

28/01/2013 to

08/03/2013

12/03/2013 to

12/04/2013

28/01/2013 to

26/04/2013

1 – 6

7 – 11

1 – 11

11/03/2013

15/04/2013

29/04/2013

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Study programme: Second semester – 2013 Assignment Date Study unit Due date

01

02

03

15/07/2013 to

26/08/2013

20/08/2013 to

20/09/2013

15/07/2013 to

04/10/2013

1 – 6

7 – 11

1 – 11

19/08/2013

23/09/2013

07/10/2013

*N.B. This is only a guideline. Foreign students and students in areas with irregular postal

services must allow additional time for possible postal delays.

We feel that at this juncture a word of warning would not be amiss. Please do not allow yourself to get behind with you study programme. Regaining of lost time is seldom achieved. Those of you who register late should endeavour to put in additional time in order to make up the time lost.

7 MODULE PRACTICAL WORK AND WORK INTEGRATED LEARNING There are no practicals for this module. 8 ASSESSMENT 8.1 Assessment plan There are 3 assignments for this module.

• Assignment 01 is a multiple choice assignment that is compulsory and contributes 5% towards your year mark. If you do not submit this assignment you will not be admitted to the examination.

• Assignment 02 is a multiple choice assignment that is also compulsory and

contributes 5% towards your year mark.

• Assignment 03 is a long question assignment. This assignment must not be submitted to UNISA for marking because it does not count any marks.

Please keep copies of your submitted assignments and if submitted through myUnisa, proof that you submitted the assignment.

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Students require a final mark of 50% to pass a module. This final mark is electronically calculated as follows:

(5% x mark obtained for compulsory assignment 01) + (5% x mark obtained for compulsory assignment 02) + (90% x mark obtained in the examination).

Sub minimum requirements A sub minimum of 40% in the examination is required. Paragraph 4.13 of the Assessment Policy provides that the final mark of a student is a combination of the year mark and the examination mark, in the ratio as explained above. In case where a student does not obtain the required sub minimum of 40% in the examination, the year mark does not count. The final mark is the examination mark obtained. Results of supplementary examination In terms of paragraph 4.19 of the Assessment Policy the year mark, previously obtained will not contribute to results of students writing supplementary examinations. The final mark is the supplementary examination mark. Please ensure that the first compulsory assignment reaches the University before the due date - late submission of the assignment will result in you not being admitted to the examination.

Also refer to paragraph 3 of Tutorial Letter ACTALL-4/301/2013.

The assessment of FAC2601 consists of a year mark from the two compulsory assignments (10%), plus the mark obtained from a 2 hour examination (90%). Take note: Assignment 01 is compulsory. It is marked electronically and contributes 5% towards the final mark. Assignment 02 is also compulsory. It is also marked electronically and also contributes 5% towards the year mark. The electronic (computerised) marking of the assignments relies totally on the use of mark-reading sheets. An assignment can only be marked if a mark-reading sheet is submitted. Students can also use the internet to submit the assignments. (Refer to the section on myUnisa).

8.2 General assignment numbers

Assignments are numbered consecutively per module, starting from 01.

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8.2.1 Unique assignment numbers and due dates of assignments IMPORTANT INFORMATION: First semester 2013 (examination in May/June)

Assignment

number

Format

Compulsory/

Non-compulsoryUnique number

Due date

Contribution towards final

mark

1

Multiple choice

Compulsory 776505

11/03/2013

5%

2

Multiple choice

Compulsory 851383

15/04/2013

5%

3

Long questions

Non-compulsory -

29/04/2013

0%

Exam

Long questions

Compulsory - See exam time table

90%

Second semester 2013 (examination in October/November) Assignment

number

Format Compulsory/

Non-compulsoryUnique number

Due date

Contribution towards final

mark

1

Multiple choice

Compulsory 865952

19/08/2013

5%

2

Multiple choice

Compulsory 704515

23/09/2013

5%

3

Long questions

Non-compulsory -

07/10/2013

0%

Exam

Long questions

Compulsory - See exam time table

90%

8.3 Submission of assignments Important information regarding assignments

Assignments constitute an integral part of the tutorial matter. Assignments and tutorial letters must also be studied for examination purposes.

ASSIGNMENTS MAY NOT BE SUBMITTED BY FAX OR E-MAIL

• Study material on which assignments are based is given in the study program in

paragraph 6.7 of this tutorial letter. • Work carefully through the relevant tutorial matter before you tackle the assignment.

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• Calculate your answers for the multiple-choice questions of assignments 01 and 02 on a separate piece of paper. Use a mark-reading sheet to complete assignments 01 and 02 and submit the assignments. Ensure that you use the correct UNIQUE NUMBER allocated for the particular assignment and semester. This assignment can also be submitted via myUnisa.

Remember: - there is only one correct answer to each question, and - all questions are equal in value.

• No bar code should be attached to the mark-reading sheet. • Assignments must not reach us later than the dates specified in paragraph 6.7 of this

tutorial letter. • Assignments must under no circumstances contain any correspondence. • Specify the module code (FAC2601) and assignment number (01 or 02) in all enquiries

regarding assignments handed in for marking. Examination admission requirements The submission of Assignment 01 is a requirement to be admitted to the examination. It will, however, be to your own advantage to complete all the assignments, as: • the assignments provide practice which is essential in your study of Accounting, • valuable revision material is contained in the assignments and ensure that you work

throughout the semester, and • the type of questions in assignment 03 and the study guide are usually representative

of the type of questions which you can expect in the examination. Plagiarism Do not copy the assignment solutions of fellow students!! Plagiarism (copying) is the act of taking word, ideas and thoughts of others and passing them off as your own. It is a form of theft which involves a number of dishonest academic activities.

The Disciplinary Code for Students (2004) is given to all students at registration. Students are advised to study the Code, especially Sections 2.1.13 and 2.1.14 (2004:3-4). Kindly read the University’s Policy on Copyright Infringement and Plagiarism as well.

8.4 Assignments All the assignments of this module, both first and second semester, will now follow.

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ASSIGNMENT 01: FIRST SEMESTER

THIS ASSIGNMENT IS COMPULSORY FOR EXAMINATION ADMISSION AND CONTRIBUTES

5% TOWARDS YOUR FINAL MARK

STUDENTS REGISTERED:

- FOR THE FIRST SEMESTER Due date: 11/03/2013

Unique Number: 776505

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ASSIGNMENT 01/2013 DUE DATE: First semester - 11/03/2013 UNIQUE NUMBER: FIRST SEMESTER: 776505 DOT NOT SUBMIT ASSIGNMENTS BY MEANS OF FAX OR E-MAIL NB: 1. This assignment must be answered on a mark-reading sheet or can be submitted via

myUnisa. This assignment is marked electronically, therefore the strict adherence to the due date.

2. Before answering this assignment please read paragraphs 8 of this tutorial letter. 3. This assignment covers study units 1 – 6 and comprises 10 multiple choice

questions. 4. NO EXTENSION WILL BE GRANTED FOR THE LATE SUBMISSION OF THIS

ASSIGNMENT AND NO CORRESPONDENCE OR TELEPHONE CONVERSATIONS WILL BE CONDUCTED IN THIS REGARD.

5. IMPORTANT ASPECTS REGARDING MULTIPLE-CHOICE ASSIGNMENTS

• A mark-reading sheet is required for answering assignment 01. Before completing the mark-reading sheet please see the instructions contained in this year’s issue of “My studies @ Unisa”. Read these instructions CAREFULLY and follow them EXACTLY to avoid mistakes.

• Work carefully through the relevant tutorial matter before you tackle the

assignment. • Calculate your answer on a separate piece of paper before you complete the

mark-reading sheet.

REMEMBER

- There is only one correct answer to each question. - All questions are equal in value. - Only mark-reading sheets provided, may be used. - Colour in the correct block with a HB pencil. - Fill in you student number correctly. - Fill in the assignment number correctly. - Fill in the unique assignment number for the specific semester correctly. Every

assignment which is marked by the computer is given a unique number. The number contains information on the course code and assignment number. When the computer reads the mark-reading sheet with, say, the unique number , it “knows” that it is Assignment 01 for that specific module.

- Send only your mark-reading sheet to the Assignment Section in the appropriate envelope.

- Make sure that you have enough mark-reading sheets.

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DO NOT:

- make more than one mark per question, - tear or fold the mark-reading sheet, - staple the mark-reading sheet to another piece of paper, - colour outside the block, - colour in the block with a pen, - make corrections with correction fluid, - submit answers on a written sheet of paper, or - try to repair a torn mark-reading sheet with sticky tape - use another one.

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FIRST SEMESTER 2013 ASSIGNMENT 1 (20 marks) (24 minutes) Answer the following multiple choice questions. Indicate your choice by only selecting 1, 2, 3 or 4 for each question answered. FRAMEWORK OF ACCOUNTING 1. Which of the following enhancing qualitative characteristics can further enhance the

usefulness of information that is already relevant and faithfully represented:

1) Neutrality 2) Comparability 3) Completeness 4) Free from error

SHARE TRANSACTIONS Questions 2 to 4 are based on the following information: The following information of share capital appear, inter alia, in the books of Chikutuma Limited on 28 February 2012

Rand Ordinary share capital 1 500 000Proceeds on ordinary shares issued – 31 August 2011 (Issued at R1,30 each)

650 000

Additional information: a) 1 200 000 Ordinary shares were issued at incorporation on 1 March 2009. b) The following decisions were made by the directors and must still be recorded:

- Capitalisation issue of shares must be made on 30 December 2011 to ordinary

shareholders in the ratio of one ordinary share, at R1.50, for every 5 ordinary shares held.

2. The number of ordinary shares issued to the public before capitalisation issue is:

1) 500 000 shares 2) 625 000 shares 3) 1 700 000 shares 4) 1 825 000 shares

3. The number of ordinary shares capitalised is:

1) 100 000 shares 2) 125 000 shares 3) 340 000 shares 4) 365 000 shares

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ASSIGNMENT 1 (continue) 4. The amount of ordinary shares capitalised was:

1) R125 000 2) R156 250 3) R510 000 4) R456 250

REVENUE Questions 5 to 7 are based on the following information: Zililo Limited entered into a contract with a client to provide services for a period of three (3) years starting on 1 October 2011.The client has agreed to pay R300 000 on 1 October 2011 for services to be provided in the three (3) years. Zililo Limited has reliably estimated that the total costs attributable to this service agreement for the year ended 30 September 2012 is R160 000 and remained unchanged to date. Also, R100 000 of the service cost has been incurred by Zililo for the year. 5) The total amount received by Zililo for the services at the beginning of an agreement is:

1) R100 000 2) R160 000 3) R187 500 4) R300 000

6) The total amount of service costs incurred by Zililo for the year is:

1) R100 000 2) R160 000 3) R187 500 4) R300 000

7) The amount of revenue to be recognised by Zililo based on cost incurred on services in

the current year is:

1) R100 000 2) R160 000 3) R187 500 4) R300 000

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ASSIGNMENT 1 (continue) STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME AND STATEMENT OF CHANGES IN EQUITY Questions 8 to 10 are based on the following information: An office building was acquired on 1 March 2010 for R350 000. It was accounted for at cost price. On 2 March 2012, the cost of newly constructed similar building was determined to be R375 000. The company has a policy that includes the following, amongst others: - Revaluation of office buildings is made at the beginning of every third year on a net

replacement basis. - Revaluation surplus or deficit is written off over the remaining useful life of office

buildings. - Buildings are depreciated at 10% per annum according to the straight line method.

8. The amount of revaluation surplus or deficit on 2 March 2012 is:

1) R17 500 2) R20 000 3) R22 500 4) R95 000

9. The amount to be written off from revaluation surplus or deficit for the year ended

29 February 2013 is:

1) R 1 750 2) R11 875 3) R 2 250 4) R 2 500

10. Depreciation to be written off, during the year ended 29 February 2013, is:

1) R46 875 2) R30 000 3) R35 000 4) R37 500

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ASSIGNMENT 02: FIRST SEMESTER






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ASSIGNMENT 02/2013 DUE DATE: First semester - 15/04/2013 UNIQUE NUMBER: FIRST SEMESTER: 851383 DOT NOT SUBMIT ASSIGNMENTS BY MEANS OF FAX OR E-MAIL NB: 1. This assignment must be answered on a mark-reading sheet or can be

submitted via myUnisa. This assignment is marked electronically, therefore the strict adherence to the due date. 2. Before answering this assignment please read paragraphs 8 of this tutorial letter. 3. This assignment covers study units 7 – 11 and comprises 10 multiple choice




• A mark-reading sheet is required for answering assignment 01. Before

completing the mark-reading sheet please see the instructions contained in this year’s issue of “My studies @ Unisa”. Read these instructions CAREFULLY and follow them EXACTLY to avoid mistakes.



mark-reading sheet.

REMEMBER





FAC2601/101

25

DO NOT:


26

FIRST SEMESTER 2013 ASSIGNMENT 2 (20 marks) (24 minutes) Answer the following multiple choice questions. Indicate your choice by only selecting 1, 2, 3 or 4 for each question answered. 1. Which one of the following costs is NOT regarded as a directly attributable cost of an

item of property, plant and equipment?

1. Cost of site preparation. 2. Cost of advertising and promotional activities. 3. Professional fees. 4. None of the above.

2. On 31 March 2011 a motor vehicle with an original cost of R200 000 and on which

accumulated depreciation of R80 000 was written off up to the beginning of the financial year, was traded in at a loss of R14 000. Motor vehicles are depreciated at 20% per annum according to the straight-line method. The financial year ends on 30 June 2011. The total depreciation for the current year is:

1. R 30 000 2. R 40 000 3. R120 000 4. None of the above.

3. Which one of the following according to IAS 2 is included with the purchasing cost of

inventory?

1. Transport and handling cost. 2. Import duties. 3. Purchase price of finished goods or raw materials. 4. All of the above.

4. The terms of an operating lease are as follows:

Lease term ............................................................................................. 4 years Initial payment ....................................................................................... R14 400 Instalment payable in areas: month 1 – 24 ......................................... month 25 – 48 .......................................

R2 000 R1 000

Calculate the lease expense recognised in the statement of profit or loss and other

comprehensive income for the first financial year.

1. R 2 000 2. R24 000 3. R18 000 4. R21 600

FAC2601/101

27

ASSIGNMENT 2 (continued) 5. Which of the following will be classified as an operating lease according to IAS 17?

1. The lessee does not normally have the option to purchase the asset. 2. Lease term is normally shorter than the economic useful life of an asset. 3. Ownership is not transferred to the lessee at the end of the lease agreement. 4. All of the above.

Use the following information to answer question 6 and 7: The following information is given: Amortisation table for finance lease

Balance R

Interest R

Capital R

Instalments R

01-01-2010 225 000 30-06-2010 195 510 21 510 29 490 51 000 31-12-2010 163 201 18 691 32 309 51 000 30-06-2011 127 803 15 602 35 398 51 000 31-12-2011 89 021 12 218 38 782 51 000 ABC Limited leased a machine from XYZ Limited on 1 January 2010. The cash price of the machine was R225 000. Lease payments are made half yearly in arrears over a period of 3 years. 6. Which amount will be disclosed in the statement of financial position under “long-term

borrowings” (non-current liabilities) for the financial year ended 31 December 2010?

1. R163 201 2. R127 803 3. R123 000 4. R 89 021

7. Which amount will be disclosed in the statement of the financial position under “current

portion of long-term borrowings” for the financial year ending 31 December 2010?

1. R35 398 2. R38 782 3. R74 180 4. R51 000

28

ASSIGNMENT 2 (continued) 8. A Limited bought 1 000 shares in B Limited at R2 per share on 1 January 2010. The

share price was R3 at year end 31 December 2010. The price was R5,50 at year end 31 December 2011. The shares were classified as a financial asset at fair value through profit or loss.

What was the fair value adjustment recognised for the financial year end

31 December 2011?

1. R4 000 2. R1 500 3. R 500 4. R2 500

9. Profits and losses arising through fair value adjustments of financial assets classified as

fair value through profit and loss are recognised as follows:

1. Directly in equity 2. In profit or loss 3. Option 1 and 2 4. No adjustment is made in the financial records.

10. Which of the following statements are false?

1. Net realisable value is an entity-specific amount realised from the sale of inventories in the ordinary course of business by that entity.

2. Inventory is measured at lower of cost and net realisable value. 3. Inventory is held for sale in the ordinary course of business. 4. None of the above.

FAC2601/101

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ASSIGNMENT 01:

SECOND SEMESTER




- FOR THE SECOND SEMESTER Due date: 19/08/2013


30

ASSIGNMENT 01/2013 DUE DATE: Second semester - 19/08/2013 UNIQUE NUMBER: SECOND SEMESTER: 865952 DOT NOT SUBMIT ASSIGNMENTS BY MEANS OF FAX OR E-MAIL NB: 1. This assignment must be answered on a mark-reading sheet or can be

submitted via myUnisa. This assignment is marked electronically, therefore the strict adherence to the due date. 2. Before answering this assignment please read paragraph 8 of this tutorial letter. 3. This assignment covers study units 1 – 6 and comprises 10 multiple choice




A mark-reading sheet is required for answering assignment 01. Before completing the mark-reading sheet please see the instructions contained in this year’s issue of “My studies @ Unisa”. Read these instructions CAREFULLY and follow them EXACTLY to avoid mistakes.

Work carefully through the relevant tutorial matter before you tackle the

assignment. Calculate your answer on a separate piece of paper before you complete the

mark-reading sheet.

REMEMBER





FAC2601/101

31

DO NOT:


32

SECOND SEMESTER 2013 ASSIGNMENT 1 (20 marks) (24 minutes) Answer the following multiple choice questions. Indicate your choice by only selecting 1, 2, 3 or 4 for each question answered. FRAMEWORK OF ACCOUNTING 1. The objective of financial statements is:

1) The provision of information on the financial position, performance and change in financial position of an entity over time.

2) Information is provided to a wide range of users of financial statements. 3) Information is useful in making economic decisions. 4) All of the above.

SHARE TRANSACTIONS Questions 2 to 4 are based on the following information: The following information on share capital appear, inter alia, in the books of Malemona Limited on 28 February 2012:

Rand Ordinary share capital 1 700 00010% Cumulative preference shares 300 00012% Non-cumulative preference shares 550 000Profit 800 000

Additional information: a) 1 300 000 Ordinary shares were issued on 1 March 2009 whilst 400 000 ordinary

shares were issued on 31 August 2011. b) Cumulative preference shares and non-cumulative preference shares of R150 000 and

R275 000, respectively were issued on 31 August 2011.

c) An ordinary dividend of 10c per share was declared on 28 February 2012. No dividends were declared by the company during the previous financial year.

2. The amount of dividends on ordinary shares declared is:

1) R130 000 2) R150 000 3) R170 000 4) None of the above

3. The amount of dividends payable on cumulative preference shares is:

1) R60 000 2) R37 500 3) R30 000 4) R22 500

FAC2601/101

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ASSIGNMENT 1 (continue) 4. The amount of dividends on non-cumulative preference shares payable is:

1) R49 500 2) R66 000 3) R82 500 4) R99 000

REVENUE Questions 5 to 7 are based on the following information: The revenue account in the general ledger of Alabama Limited showed a balance of R200 000 for the financial year ended 30 April 2011 before taking the following into account: a) Sales deposit of R2 665 received in respect of goods with a total sales value of R5 000.

Goods are on hand and ready for delivery. b) Lay away sales deposit of R1 000 received in respect of goods with a total sales value

of R20 000. Goods are on hand and ready for delivery. c) Sales of R15 000 on a cash-on-delivery basis. Goods were ordered by the customer on

29 April 2011. The package was delivered to and paid for by the customer, on 1 June 2011.

d) Sales of R7 000 made to a friend of the manager during April 2011. Goods are going to

be delivered in June 2011. Significant deposits on Alabama Limited’s sales are considered to be 50% or more of the sales price.

5. The amount of revenue relating to cash-on-delivery basis that must be recorded in the

accounting records of Alabama Limited is:

1) R 5 000 2) R25 000 3) R40 000 4) R47 000

6. The amount of revenue relating to lay away sales that must be recorded in the


1) R 0 2) R 5 000 3) R15 000 4) R20 000

34

ASSIGNMENT 1 (continue) 7. The total amount of revenue, not yet taken into account, that must be recorded in the


1) R 5 000 2) R25 000 3) R40 000 4) R47 000

STATEMENT OF COMPREHENSIVE INCOME AND STATEMENT OF CHANGES IN EQUITY Questions 8 to 10 are based on the following information: The following information were taken from the books of Manelisi Limited, a listed company for the financial year ended 30 June 2011:

Rand Land 1 000 000Buildings at cost 1 200 000Accumulated depreciation – Buildings (01/07/2010) 300 000

Additional information: The following must still be accounted for: a) Buildings are written off over a period of 20 years according to the straight line method. b) On 2 July 2010 land and buildings were revalued by Mr Visagie, a sworn appraiser, at

the net replacement value of R1 500 000 and R1 100 000 respectively. Land and buildings are occupied by Manelisi Limited. It is company policy to revalue land and buildings according to a net replacement basis.

8. The amount of revaluation surplus or deficit on land is:

1) R 200 000 2) R 500 000 3) R1 100 000 4) R1 500 000

9. The amount of revaluation surplus or deficit of buildings is:

1) R 200 000 2) R 500 000 3) R1 100 000 4) R1 500 000

10. The amount of depreciation for the year ended 30 June 2011 is:

1) R22 000 2) R55 000 3) R60 000 4) R73 333

FAC2601/101

35

ASSIGNMENT 02: SECOND SEMESTER




- FOR THE SECOND SEMESTER Due date: 23/09/2013


36

ASSIGNMENT 02/2013 DUE DATE: Second semester - 23/09/2013 UNIQUE NUMBER: SECOND SEMESTER: 704515 DOT NOT SUBMIT ASSIGNMENTS BY MEANS OF FAX OR E-MAIL NB: 1. This assignment must be answered on a mark-reading sheet or can be

submitted via myUnisa. This assignment is marked electronically, therefore the strict adherence to the due date.

2. Before answering this assignment please read paragraphs 8 of this tutorial letter. 3. This assignment covers study units 7 – 11 and comprises 10 multiple choice




• A mark-reading sheet is required for answering assignment 02. Before completing the mark-reading sheet please see the instructions contained in this year’s issue of “My studies @ Unisa”. Read these instructions CAREFULLY and follow them EXACTLY to avoid mistakes.



mark-reading sheet. REMEMBER





FAC2601/101

37

DO NOT:


38

SECOND SEMESTER 2013 ASSIGNMENT 2 (20 marks) (24 minutes) Answer the following multiple choice questions. Indicate your choice by only selecting 1, 2, 3 or 4 for each question answered.

1. A new assessment of net realisable value (NRV) of inventory is made in each financial year. Which one of the following does not indicate that a possible NRV adjustment is not required?

1. Increases in selling prices. 2. Wholly or partially obsolete inventory. 3. Damaged inventories. 4. Increases in selling costs.

An investor entered into the following transactions in ordinary shares of JAM Limited for the six months ended 30 June 2012:

Date Transaction Shares Price per share 2 January Purchased 500 20 cents 1 February Purchased 1 000 25 cents 1 March Sold 400 30 cents 1 April Purchased 300 40 cents 1 June Sold 800 50 cents

The shares traded at 55 cents each on 30 June 2012. 2. The fair value adjustment at 30 June 2012, if the FIFO method is used, is:

1. R330 2. R150 3. R135 4. None of the above.

3. The profit/loss on sale of the shares for the six-month period ended 30 June 2012, if the

weighted average method is used, is:

1. R100 2. R200 3. R300 4. None of the above.

4. On 31 March 2012 a motor vehicle with an original cost of R100 000 and on which

accumulated depreciation of R40 000 was written off up to the beginning of the financial year, was traded in at a loss of R7 000. Motor vehicles are depreciated at 20% per annum according to the straight-line method. The financial year ends on 30 June 2012. Which one of the following amounts represents the total depreciation for the current year?

1. R20 000 2. R55 000 3. R60 000 4. R15 000

FAC2601/101

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ASSIGNMENT 2 (continued) 5. On 31 March 2012, furniture with an original cost price of R100 000, and on which

R40 000 were already written off up to the beginning of the financial year, were traded in at a loss of R5 000. Furniture is depreciated at 10% per year according to the straight-line method. The financial year ends on 30 June 2012.

Which of the following options represents the carrying amount of furniture sold that

must be disclosed in the property, plant and equipment note?

1. R52 500 2. R55 000 3. R50 000 4. None of the above.

The following relates to an asset:

R Cost of asset (1/1/2011) ........................................................................................ 180 000Accumulated depreciation (31/12/2012) ............................................................... 60 000Net replacement value at date of revaluation (1/1/2013) ..................................... 140 000

The asset is depreciated according to the straight-line basis over 6 years. 6. The revaluation amount, if the gross carrying amount and accumulated depreciation are

restated in proportion to the revalued amount, is:

1. R140 000 2. R 20 000 3. R120 000 4. None of the above.

ABC (Pty) Ltd manufactures Product X for resale. The manufacturing cost per Product X is R1 400. Finished units of Product X are sold for R1 600. The following costs accrued with the manufacturing of Product X:

R Cost to complete inventories ...................................................................... 280 per unitPackaging cost ............................................................................................ 30 per unitAdvertising .................................................................................................. 40 per unitSalaries of administrative staff .................................................................... 2 000 per monthSales commission ....................................................................................... 100 per unitTrade discount allowed ............................................................................... 20 per unit

The closing inventories of Product X on hand for the year ended 31 December 2012 amounted to 10 000 units. 7. The value of the inventories (Product X) according to the requirements of IAS 2, is:

1. R14 000 000 2. R11 000 000 3. R16 000 000 4. None of the above.

40

ASSIGNMENT 2 (continued)

8. Which of the following statements are false?

1. Property, plant and equipment can be measured by the cost model and the revaluation model.

2. Inventory are measured at the lower of net realisable value and cost. 3. Property, plant and equipment can serve as securtiy for long-term loans. 4. The maintenance of an operating lease is usually carried by the lessee.

9. Which of the following will be classified as a finance lease according to IAS 17?

5. The lessee has the option to purchase the asset. 6. Lease term represents most of the economic life of the asset. 7. Ownership transferred to the lessee at the end of the lease term. 8. All of the above.

The following details are relevant to the lease of a motor vehicle: Cash price : R150 000 Instalments : Repayable in 60 equal instalments at the end of each month. Flat rate : 9% per year over 5 years 10. Which one of the following will be the monthly instalment? 1. R2 500 2. R3 625 3. R3 847 4. None of the above.

FAC2601/101

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ASSIGNMENT 03: FIRST AND SECOND SEMESTER

THIS ASSIGNMENT IS NOT COMPULSORY AND DOES NOT COUNT ANY MARKS



- FOR THE SECOND SEMESTER

Due date: 07/10/2013

42

QUESTION

SUBJECT

MARKS

MINUTES

1 Statement of profit or loss and other comprehensive income and notes

30

36

2 Statement of profit or loss and other comprehensive income and notes

25

30

3 Statement of changes in equity 20 24 4 Statement of changes in equity 26 32 5 Statement of financial position and notes 24 28 6 Statement of financial position and notes 30 36 7 Statement of changes in equity 26 32

8 – 11 Property, Plant and Equipment (PPE) (Study unit 9)

26

31

12

Financial Instruments (Study unit 8)

8

10

13 – 15

Property, Plant and Equipment (PPE) (Study unit 9)

32

38

16 – 22

Revenue (Study unit 5)

35

42

23

Operating Lease (Study unit 11)

18

22

24

Finance Lease (Study unit 11)

35

42

25

Finance Lease (Study unit 11)

16

19

26 Time value of money 44 53 27 Time value of money 25 30 420 505

FAC2601/101

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QUESTION 1 (30 marks) (36 minutes) The following balances were extracted from the books of Vula Limited for the financial year ended 28 February 2006:

Revenue .................................................................................................................Cost of sales ...........................................................................................................Other operating income ..........................................................................................Distribution costs ....................................................................................................Administrative expenses ........................................................................................Other operating expenses (including finance costs) ..............................................Retained earnings (1 March 2005) ........................................................................Land at valuation (1 March 2005) ..........................................................................Buildings at cost .....................................................................................................Plant and machinery at cost (purchased on 1 March 2004) ..................................Furniture and equipment at cost (purchased on 1 September 2004) ....................Accumulated depreciation - Buildings ...............................................................................................................- Plant and machinery ............................................................................................- Furniture and equipment ......................................................................................Investments ............................................................................................................Loan to Bolo Limited ..............................................................................................Long-term loan .......................................................................................................Income tax expense ...............................................................................................

R 12 000 0005 000 000

245 0001 200 0003 000 0001 025 0005 000 0002 000 0001 800 0003 500 000

700 000

198 0001 050 000

101 500390 000600 000

1 600 000585 800

Additional information: 1. Investments consist of the following: - 40 000 Ordinary shares in Stud Limited at a cost of R120 000. The issued share capital

of Stud Limited consists of 400 000 ordinary shares of R1 each. Each share has one vote. These shares are traded on the JSE Securities Exchange and the market value of the shares was R3 each on 28 February 2006. These shares are classified as available for sale and therefore not held for the sole purpose of trading.

- 30 000 Ordinary shares in Bolo Limited at a cost of R150 000. The issued share capital

of Bolo Limited consists of 40 000 ordinary shares of R1 each. Each share has one vote. These shares are traded on the JSE Securities Exchange and the market value was R150 000 on 28 February 2006.

- 20 000 Ordinary shares in Max (Pty) Limited at a cost of R120 000. The issued share

capital of Max (Pty) Limited consists of 200 000 ordinary shares of R1 each. The directors valued the shares at R6 each on 28 February 2006. These shares were obtained for speculative purposes.

44

QUESTION 1 (continued) 2. Other operating income consists of:

- dividends received from Bolo Limited ............................................................. - interest received on loan to Bolo Limited ........................................................ - dividends received from Max (Pty) Ltd ............................................................ - dividends received from Stud Limited ............................................................. - profit on sale of non-current asset ...................................................................

R 90 00045 00060 00040 00010 000

3. Administrative expenses consist of:

Printing and stationery ..................................................................................... General expenses ............................................................................................ Salaries and wages ......................................................................................... Telephone ........................................................................................................ Auditors’ remuneration - Fees for audit ................................................................................................. - Expenses .......................................................................................................

R 800 000300 000

1 200 000610 000

75 00015 000

4. Key personnel of Vula Limited and Bolo Limited are as follows:

Chairman ........................................................................................ Managing director ........................................................................... Marketing director ........................................................................... Directors .......................................................................................... Accountant ...................................................................................... Financial director ............................................................................ Marketing manager .........................................................................

Vula Ltd A B C

D and E F G H

Bolo Ltd G A -

F and I J E K

5. The following salaries were paid during the year:

Managing director .........................................................................Marketing director .........................................................................Financial director ..........................................................................Accountant ....................................................................................Marketing manager .......................................................................Other .............................................................................................

Vula Ltd R

300 000 180 000 250 000 190 000 200 000

80 000

Bolo Ltd R

200 000160 000200 000150 000120 00060 000

6. General expenses include amongst others the following: 6.1 Entertainment allowances of R24 000 and R12 000 paid to the managing directors of

Vula Ltd and Bolo Ltd respectively for the current financial year. 6.2 During the financial year the directors of Vula Ltd and Bolo Ltd each attended four board

meetings. The directors of Vula Ltd and Bolo Ltd received R1 000 and R800 each per meeting. The chairmen of the two companies received an additional R750 and R500 respectively per meeting.

FAC2601/101

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QUESTION 1 (continued) 7. Other operating expenses include depreciation for the current financial year as well as a

loss on sale of a non-current asset of R14 000. 8. The non-current assets are depreciated at the following rates: Buildings Expected useful economic life of 50 years Plant and machinery 15% per annum using the straight-line method Furniture and equipment 10% per annum using the reducing balance method 9. The loan to Bolo Limited was made on 1 June 2005 at an interest rate of 10% per

annum. 10. The long-term loan was incurred on 31 May 2001 and the capital portion is repayable in

ten equal annual installments starting 31 August 2004. Interest, calculated at 15% per annum, is payable bi-annually on 31 August and 28 February each year.

REQUIRED: Prepare the statement of profit or loss and other comprehensive income of Vula Limited for the financial year ended 28 February 2006 in compliance with the requirements of Generally Accepted Accounting Practice. Only show the note on profit before tax. Ignore comparative figures and the statement of changes in equity. Show calculations.

46

QUESTION 2 (25 marks) (30 minutes) The following balances were extracted from the books of Last Resort Limited for the financial year ended 29 February 2008:

Total sales (including VAT at 14%) ................................................................. VAT paid .......................................................................................................... Cost of sales .................................................................................................... Administrative expenses Bank charges .............................................................................................. Salaries and wages ..................................................................................... Advertising ................................................................................................... Auditors’ remuneration - Fees for audit ............................................................................................ - Expenses .................................................................................................. Distribution costs ............................................................................................. Other operating expenses (including finance costs and depreciation) ........... Other operating income ................................................................................... Provisional tax paid ......................................................................................... Proceeds on sale of motor vehicle .................................................................. Preliminary expenses ...................................................................................... Equipment at carrying amount ........................................................................ Motor vehicles at cost ..................................................................................... Accumulated depreciation: Motor vehicles ..................................................... Investments ..................................................................................................... Long-term loan (Cr) ......................................................................................... Income tax expense ........................................................................................

R 7 980 000

840 0002 800 000

12 0002 000 000

110 000

40 0008 000

268 000370 00038 000

480 00085 000

7 50048 000

240 00060 000

370 00090 000

421 950 Additional information: 1. VAT for January and February 2008 will be paid on 25 March 2008. 2. Included under salaries and wages are the following payments to top management:

Salaries - Managing director .......................................................................................... - Chairman of the directory .............................................................................. - Marketing manager ........................................................................................ - Financial director ............................................................................................ Travelling allowance – Managing director ........................................................... Entertainment allowance – Marketing manager .................................................. Pension payments - Managing director .......................................................................................... - Chairman ........................................................................................................

R

240 000120 000180 000200 000

12 0006 000

24 00012 000

The top management were paid R5 000 each for attending directors’ meetings. 3. The long-term loan was incurred on 1 January 2002 and the capital portion is repayable

in five equal annual installments starting 31 August 2006. Interest is calculated at 15% per annum and is payable at the end of each financial year.

FAC2601/101

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QUESTION 2 (continued) 4. Other operating income consists of:

Dividends received from the following companies: - Only Resort (Pty) Limited ........................................................................................ - Smart Resort Limited............................................................................................... Interest received from Only Resort (Pty) Limited ..........................................................

R

12 00020 000

6 000 38 000

The issued ordinary share capital of Only Resorts (Pty) Ltd is R40 000 (shares issued at R2 each). Last Resort Limited owns 12 000 shares in Only Resort (Pty) Ltd. Last Resort Limited owns 100 000 of the 2 400 000 issued shares in Smart Resort Limited purchased for R250 000. The shares of Smart Resort Limited are traded on the JSE Securities Exchange and the market value per share was R2,50 each on 28 February 2007. The market value on 29 February 2008 was R3 per share and no adjustments has yet been made regarding the increased market value. These shares were obtained for speculative purposes. 5. The non-current assets are depreciated at the following rates and methods: Motor vehicles - 20% per annum using the reducing balance method Equipment - 20% per annum using the straight-line method One of the motor vehicles with a carrying amount of R80 000 on 28 February 2007 was

sold on 31 August 2007. All the equipment was purchased on 1 March 2005 and no sales or purchases of

equipment occurred since then. REQUIRED: 1. Prepare the statement of profit or loss and other comprehensive income of

Last Resort Limited for the financial year ended 29 February 2008 in compliance with the requirements of Generally Accepted Accounting Practice. Ignore comparative figures. Show all calculations. (13)

2. Show the note on profit before tax for the statement of profit or loss and other

comprehensive income of Last Resort Limited for the financial year ended 29 February 2008 according to the requirements of Generally Accepted Accounting Practice. (12)

48

QUESTION 3 (20 marks) (24 minutes) The following information appear, inter alia, in the books of Vision Limited on 28 February 2006 Land at valuation ....................................................................................................Share capital – ordinary shares .............................................................................10% Cumulative preference shares .......................................................................12% Non-cumulative preference shares ................................................................Share issue expenses ............................................................................................Surplus on revaluation of non-current assets ........................................................Reserve for increased replacement cost of non-current assets ............................15% Long-term liability ...........................................................................................Retained earnings (1 March 2005) ........................................................................Profit for the year ....................................................................................................

R 3 000 0001 500 000

300 000550 000

25 000500 000250 000

1 400 000350 000800 000

Additional information: 1. The land was revalued at replacement value on 30 November 2005 for R4 000 000 by

Mr Value, a sworn appraiser, but no entry has as yet been passed in the books to record this.

2. Vision Limited was incorporated with an authorised share capital of: 2 000 000 Ordinary shares 500 000 10% Cumulative preference shares 300 000 12% Non-cumulative preference shares 300 000 14% Redeemable preference shares 3. The issued share capital of Vision Limited consists of: 1 200 000 Ordinary shares 200 000 10% Cumulative preference shares issued during 2002 275 000 12% Non-cumulative preference shares issued on 31 May 2003 4. The following decisions were made by the directors on 28 February 2006 and must still

be recorded in the following order: 4.1 Capitalisation shares must be issued to the ordinary shareholders in the ratio of one

ordinary share at R1,25 for every 6 ordinary shares held. 4.2 Share issue expenses must be written off against retained earnings. 4.3 The reserve for increased replacement cost of non-current assets must be increased to

R340 000. 4.4 An ordinary dividend of 10c per share was declared. No dividends were declared by the

company during the previous financial year. 5. The long-term liability was incurred in 2000 and the capital portion is repayable in

15 equal annual installments starting 1 January 2006. REQUIRED: Prepare the statement of changes in equity of Vision Limited for the financial year ended 28 February 2006 according to Generally Accepted Accounting Practice. Show calculations.

FAC2601/101

49

QUESTION 4 (26 marks) (32 minutes) The following information appears, amongst others, in the books of Trio Limited on 30 June 2006:

Ordinary share capital - 1 July 2005 (issued at R1,20 each) .....................................Cumulative preference share capital .........................................................................Reserve for replacement of non-current assets (1 July 2005) ...................................Proceeds of 40 000 ordinary shares issued on 31 March 2006 ................................Retained earnings (1 July 2005) ................................................................................Profit for the year ........................................................................................................12% Long-term loan ...................................................................................................Land at cost ................................................................................................................Buildings at cost .........................................................................................................Machinery at carrying amount ....................................................................................Furniture and equipment at cost ................................................................................Accumulated depreciation - Buildings ............................................................................................................... - Furniture and equipment ......................................................................................Inventory .....................................................................................................................Share issue expenses ................................................................................................Trade and other receivables ......................................................................................Cash and cash equivalents ........................................................................................Investments ................................................................................................................

R 432 000200 000

20 00056 00080 000

200 00080 000

100 000500 000225 000100 000

30 00042 60080 20016 00065 40071 000

120 000 Additional information: 1. Trio Limited was incorporated with an authorised share capital of: 800 000 Ordinary shares 250 000 12% Cumulative preference shares 100 000 5% Redeemable preference shares 2. The company did not issue any preference shares during the previous financial year, but

on 1 January 2006 12 500 cumulative preference shares were issued at R4,08 each. 3. The following decisions were made by the directors on 30 June 2006 and must still be

recorded in the following order: 3.1 Capitalisation shares must be issued to the ordinary shareholders in the ratio of one

ordinary share at R1,20 for every 8 ordinary shares held. After the capitalisation issue an ordinary dividend of 20c per share was declared. This decision was made because the company did not declare any dividends during the previous financial year.

3.2 Share issue expenses must be written off against retained earnings. 3.3 Reserve for replacement of non-current assets must be increased with R70 000. 4. The long-term loan was incurred during 2000 and the capital portion is repayable in five

equal annual installments starting 30 April 2006. The loan is secured by a first mortgage over fixed property.

50

QUESTION 4 (continued) 5. Land and buildings are situated on erf 3510, George, and consist of an office block. The

land was revalued at replacement value on 31 October 2005 for R150 000 by Mr Black, a sworn appraisor, but no entry has as yet been passed in the books to record this. Buildings are depreciated at 2% per annum according to the straight-line method.

6. All the machinery was purchased on 1 July 2004. The company provides for depreciation

on machinery at 25% per annum on the diminishing balance method. No sale of machinery occurred since date of purchase.

7. Furniture and equipment is depreciated on the straight-line method over a period of

5 years. On 31 March 2006 an old computer which originally cost R5 000 and on which R3 000 accumulated depreciation was written off at the beginning of the financial year, was traded in for a new computer at a cost of R15 000. The new computer has an estimated scrap value of R3 000, while the remaining furniture and equipment have no residual value.

8. Investments consist of the following: 8.1 15 000 Ordinary shares in Reds Limited at a cost of R60 000. The issued share capital of

Reds Limited consists of 20 000 ordinary shares. Each share has one vote. These shares are traded on the Johannesburg Securities Exchange and the market value was R4 each on 30 June 2006.

8.2 50 000 Ordinary shares in Bulls Limited at a cost of R50 000. The issued share capital of

Bulls Limited consists of 750 000 ordinary shares. Each share has one vote. These shares are traded on the Johannesburg Securities Exchange and the market value on 30 June 2006 was R2 per share. This investment was designated as financial asset held at fair value through profit or loss.

8.3 10 000 Ordinary shares in Blue (Pty) Limited at a cost of R10 000. The issued share

capital of Blue (Pty) Limited consists of 100 000 ordinary shares. The directors valued the shares at R1,50 on 30 June 2006. This investment was designated as available for sale and therefore not obtained with the purpose to trade.

Any fair value adjustments must still be accounted for. REQUIRED: Prepare the statement of changes in equity of Trio Limited for the financial year ended 30 June 2006 according to the requirements of Generally Accepted Accounting Practice. Ignore comparative figures. Show all calculations.

FAC2601/101

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QUESTION 5 (24 marks) (28 minutes) REQUIRED: Use the information given in question 5 to do the following in the books of Trio Limited: 5.1 The note relating to the long-term liability at 30 June 2006. 5.2 The note on property, plant and equipment at 30 June 2006. 5.3 The asset section of the statement of financial position as at 30 June 2006. Your answers must comply with the requirements of Generally Accepted Accounting Practice. Ignore comparative figures, but show all calculations. QUESTION 6 (30 marks) (36 minutes) The following balances were extracted from the books of Purco Limited at 30 June 2006: Land at cost ............................................................................................................Buildings at cost .....................................................................................................Plant and machinery at carrying amount (1 July 2005) .........................................Furniture and equipment at carrying amount (1 July 2005) ...................................Accumulated depreciation - Plant and machinery (1 July 2005) ......................................................................- Furniture and equipment (1 July 2005) ................................................................Investments ............................................................................................................Provisional tax payments .......................................................................................Bank overdraft ........................................................................................................Ordinary share capital ............................................................................................6% Cumulative preference share capital ...............................................................8% Non-cumulative preference share capital ........................................................Retained earnings (1 July 2005) ............................................................................Preliminary expenses .............................................................................................Share issue expenses ............................................................................................10% Long-term loan ...............................................................................................Profit (for the current year) before tax and depreciation ........................................Loan to Quattro Ltd (repayable 30 June 2010) ......................................................Trade and other receivables ..................................................................................Inventories ..............................................................................................................Trade and other payables ......................................................................................

R 1 000 0001 878 4002 432 000

400 000

768 000200 000400 000

80 000675 000

3 000 000500 000300 000800 000

30 00012 000

1 000 0001 000 000

150 000748 500950 000133 400

Additional information: 1. The authorised share capital of the company is as follows: 2 500 000 Ordinary shares 1 000 000 10% Redeemable preference shares 1 500 000 6% Cumulative preference shares 1 500 000 8% Non-cumulative preference shares

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QUESTION 6 (continued) 2. The issued share capital of the company is as follows: 1 500 000 Ordinary shares 500 000 6% Cumulative preference shares issued on 1 July 2000 600 000 8% Non-cumulative preference shares issued on 1 April 2006 3. 500 000 Ordinary shares were issued on 31 March 2006 at R2 per share. 4. The following transactions have not yet been recorded and should be done in this order: 4.1 Land was revalued on 1 May 2006 at replacement value for R1 500 000 by Mr Value, a

sworn appraise

Documents

T utorial Le tter 101/3/2013...You will receive a number of tutorial letters during the semester. A tutorial letter is our way of communicating with you about teaching, learning and