QUESTION 1

The following information was extracted from the financial records of Tab Limited for
the year ended 28 February 2018:

Note Amount (R)

Revenue 1 601 700

Inventory (1 March 2017) 200 800

Purchases 150 300

Inventory (28 February 2018) 72 000

Administrative expenses 2 137 500

Loan received 3 150 000

Rent income 4 140 000

Investment at cost 6 570 000

Land at cost 7 1 050 000

Delivery vehicle at cost 100 000

Accumulated depreciation: delivery vehicle 20 300

Building at cost 150 000

Accumulated depreciation on building 37 500

ADDITIONAL INFORMATION:

1. Included in this amount are the following transactions:

- Cash sales amounted to R290 000.

- Tab Limited signed a non-cancellable contract with a customer on 30
January 2018, the terms of which included the following:

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 1. Tab Limited agreed to supply goods to the customer before 22
February 2018.
2. The customer agreed to pay R55 000 in advance on 13 February 2018.
3. Tab Limited supplied the goods as per the customer’s request on 19
February 2018 on which date the customer obtained control.
4. The customer paid R55 000 on 05 March 2018.
- Interest income amounting to R135 000, this income was not acquired
through surplus funds.
- Profit on sale of delivery vehicle amounted to R11 200.

2. Administrative expenses amount include the following, amongst others:

- Directors’ fees: Marketing director R25 300

Administrative director 15 750
- Depreciation: Delivery vehicle 20 000

Buildings 7 500

- Salesman salary 8 720

- Transport costs: When purchasing inventory 1 500
When delivering goods to customers 750
- Stationery 800
- Loss on disposal of part of building 2 550
- Interest on loan 5 000
- Advertising 3 000

3. The loan was obtained from AAA Bank on 1 August 2017. Tab Limited is to make
equal annual payments over three years. The first payment will be made on 31 July
2018. Interest is charged at 10% per annum.

4. The tenant is charged R10 000 per month for rent. Rent was received for January
2017 to February 2018 and rent income is not Tab Limited’s normal business
activity.

5. South Africa current tax of R22 500 is still due at the end of 2018 financial year.

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6. Investment consists of the following:

Pear Limited Banana (Pty) Ltd

Cost R450 000 R120 000

Directors’ valuation/market value R500 000 R135 000

Number of shares 15 000 10 500

Total dividends received were R110 500, investment acquired through surplus funds.
This amount was included on the revenue amount above.

7. On 22 January 2018 land was valued at R1 100 000 by Ms. Pedi, a sworn
appraiser. The property is situated at 230B Mandla Avenue, Mbombela.

YOU ARE REQUIRED to prepare the Statement of profit or loss and other
comprehensive income with notes of Tab Limited for the year ended 28 February
2018 in compliance with the requirements of Companies Act 71 of 2008 and IFRS.

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 QUESTION 2

The following trial balance was extracted from the following records of Monde
Limited at 31 December 2016:

Note (R)

Ordinary share capital 1 220 000

12% Redeemable preference shares 1 100 000

11% long term loan –NP bank 6 90 000

Revaluation of land 2 45 000

General reserve 25 000

Net profit for the year, after all adjustments were

taken into account
100 700

Retained earnings (01/01/2016) 60 000

Vat output control 20 400

Vat input control 12 000

Trade payables 36 800

Trade receivables 49 000

Bank 3 ?

Land at valuation 2 480 000

Machinery at cost 4 140 000

Accumulated depreciation on machinery 59 360

(31/12/2016)

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Inventory 56 000

Investment at revaluation 5 60 000

Provisional tax payments 15 400

SA normal taxation 29 300

Additional information:

1. The authorized and issued share capital consists of:

200 000 ordinary shares at R1.10 each.

25 000 12% redeemable preference shares of R4 each. Shares are redeemed

in five equal installments from 31 December 2017 at the option of
shareholders.

2. Land is situated at Erf 88 Ackerville, eMalahleni and was revalued on 31 July

2016 by an independent sworn appraiser, Mr. Charlton .

3. The company has two bank accounts at BNP bank. On 31 December 2016
the one account got a favorable balance of R14 900 while the other one got
an overdraft balance of R35 740.

4. Depreciation on machinery is yearly written off at 20% per annum according

to the reducing balance method. Since the original purchase of machinery, no
new machinery was bought.

5. Investment consist of:

5 000 of the 25 000 issued ordinary shares of R1 each in Zonke (Pty) Ltd,
bought at R55 000. On 31 December these shares were valuated to an
amount of R60 000.

6. A first mortgage bond is registered over fixed property in favor of the loan at
NP Bank loan will be payable over five equal installments. The first installment
is payable on 1 January 2017. The loan is interest free.

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 7. The following must still be taken into account:
a. R7 200 must transferred to general reserve
b. Provision for ordinary dividend of 9 cent per share as well as the
preference dividend must still be made.

YOU ARE REQUIRED TO Prepare Statement of financial position and Statement of

changes in equity of Monde Limited at 31 December 2016 in accordance with the
company’s act 71 of 2008. Show Property, plant and equipment note.

QUESTION 3
Thabang (Pty) Ltd (Thabang) is a South African private company operating in an
automotive industry. Thabang imports cars from its mother company in Germany and
then resell them to a wide range of South African community. The financial year of
Thabang ends on the last day of June.

The following is an extract from the financial records of Thabang for the financial
year ended 30 June 2017. Thabang applied IFRS 15 from the inception of the
financial year under review. (Early adopted of IFRS 15).

Notes R

Land and Building at cost: 3 1 098 000

Accumulated depreciation: Buildings 341 667

 
?
Equipment at cost: 4

Machinery at cost 5 1 000 000

Accumulated depreciation: Machinery 90 000

 

Loan from FNC Bank 6 2 000 000

Revenue 1,2&5

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 20 000 000

Cost of Sales 6 700 000

Administrative cost 2 450 129

 

Additional Information:

1. Included in the revenue amount is the following transaction:

- Thabang signed a non-cancellable contract with a customer on 1 March
2017, the terms of which included the following:
5. Thabang agreed to supply a Motor car in the specification of the
customer before 10 August 2017.
6. The customer agreed to pay R1 000 000 in advance on 2 May 2017.
7. Thabang supplied the car as per the customer’s specification on 8
August 2017 on which date the customer obtained control.
8. The customer paid R1 000 000 on 15 August 2017.

2. Thabang received the following amounts, which are included in the revenue
amount given above:
- Dividends of R15 000, investment acquired through surplus funds.
- Interest income R20 000, investment acquired through surplus funds.

3. Land was acquired by Thabang (PTY) Ltd for R98 000 on 1 January 2010
when it moved from rented property. On the 1 June 2010 it erected its
administrative building for R1 000 000 which became available for use in a
manner intended by Management on 1 September 2010. Thabang moved in to
the building for the first time on 1 January 2011.

On 30 June 2017 the Land was re-valued to R120 000. This was the first
revaluation of Land and was performed by an impartial qualified professional
valuer.

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 It is the accounting policy of Thabang to subsequently measure its property, plant
and equipment at cost with an exception of Land which is measured at
revaluation Model in terms of IAS 16.

The building is depreciated at 5% using the straight line method.

4. Equipment was acquired on 1 April 2016 for R450 000 (net of VAT) and was
available for use on 1 May 2017 after incurring the following expenditure:

- Initial delivery cost R9 000

- Fitting cost to bring the equipment in usable condition as
intended by management R15 000

Because Thabang paid cash, the supplier granted Thabang a discount of

R35 000 (VAT Exclusive).

- Residual value of R10 000 applies to this equipment

- The Equipment depreciates at 10% on a diminishing balance
method.

5. Thabang sold machinery during the year under review and made a profit of
R80 000 from the disposal. This amount is included in the revenue balance
given above.

The accountant has correctly calculated depreciation on Machinery at

R15 000.

6. A loan of R2 000 000 was received on 1 January 2017 from FNC bank,
interested on this loan is payable annually at 10%.

7. The accountant has correctly calculated South African normal income tax at
R1 080 000, having taken into account all the aforementioned transactions.

8. Thabang insured its assets with VXZ insurers. Thabang paid a total of
R102 000 on 1 March 2017 for the next 12 months, this amount (R102 000) is
included in the operating/administrative expenses figure given above.

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 9. Depreciation for the year has not been recorded in the accounting records
of Thabang.

YOU ARE REQUIRED to prepare a Statement of profit or loss and other

comprehensive income together with applicable Notes of Thabang (Pty) Ltd for the
year ended 30 June 2017 in accordance with requirements of IFRS.

NB: Ignore comparative amounts.

Ignore VAT except where VAT is mentioned.

Clearly SHOW all your workings.

QUESTION 4

The following trial balance was extracted from the financial records of BRAVO LTD
on the 29 February 2016.

Trial balance of BRAVO Limited 29 February 2016

Note Debit Credit

Ordinary share capital 1 780 000
10% Redeemable preference share 1 300 000
General reserve 8 140 000
Retained earnings 1 March 2015 280 000
Land at cost 2 370 000
Building at cost 370 000
Equipment at cost 270 000
Accumulated depreciation on equipment 1 March 2015 50 000
Delivery vehicle at cost 360 000
Accumulated depreciation on vehicle 1 March 2015 90 000
Investment:300 000 ordinary shares in BAD Limited, 5 440 000
at cost price
Inventory 29 February 2016 3 370 000
Account receivable 320 000
Bank: ABSA bank 120 000
Bank: Standard bank 65 000
Account payable 7 668 000
Net profit before additional information was taken into

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account where applicable 247 000

Additional information:

1. Authorised
1000 000 Ordinary shares
350 000 10% Redeemable preference shares

Issued shares
600 000 Ordinary shares of R1.30each
200 000 10% Redeemable preference shares of R1.50each

The 10% redeemable preference shares are redeemable on the 1 st January

2019 at the option of the shareholders.

2. Land and building on Erf 694 Secunda, was acquired as a complete unit on
the 01 March 2010, it is possible to split land from the building values.

3. Inventory on 28 February 2016 were as follows:

Raw material R140 000

Work in progress R110 000

Finished goods R120 000

4. Depreciation for the year must be provided for as follows:

Equipment R20 000

Vehicle R35 000

5. Bravo Limited acquired 300 000 ordinary shares from BAD Limited. BAD
Limited declared total dividends of 15 cents per share on its ordinary shares
on 25 February 2016 which were paid to its shareholders on 5 March 2016.
The market value of the shares was R1.50 per on the 28 February 2016. No
entry has yet been made in the books regarding the dividend.

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 6. Current tax of R110 000 for the year ended 29 February 2016 must still be
provided for.

7. Included in the figure of account payable are the following:

SA Normal tax outstanding for 2015 R368 000

Value- added tax payable R26 000

Trade creditors R260 000

Allowance for doubtful debts R14 000

8. The following decisions were approved at the director’s meeting on 24

February 2016.
 Provision must be made for ordinary dividends of 15 cents per share
on ordinary shares.
 R8 000 should be transferred to general reserve

9. Rent received amounting to R14 500 for 01 March 2016; was taken into
account for 2016 financial period.

YOU ARE REQUIRED to prepare the Statement of financial position and Statement
of changes in equity for Bravo Limited as at 29 February 2016 in accordance with the
requirements of the Companies Act 71 of 2008 and IFRS. Show only a Note on
property, plant and equipment.

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 QUESTION 5

The following information relates to the financial affairs of APTY Limited (APTY).
APTY is a registered VAT vendor and has opted not to early adopt IFRS 16 and
elected to early adopt IFRS 15. VAT is calculated at 14%.

The following information was extracted from the books of APTY at 30 June 2017:

Note R

Land 650 000

Buildings 600 000
Equipment 6 350 000
Inventory 4 180 000
Investment with Princh Ltd at cost 2&7 1 120 000
Long terms loan: Shyla Bank 3 650 000
Revenue 1 1 285 000
Distribution Costs 350 853
Cost of Sales 397 250
Administrative costs 5 450 000
Finance cost 3 ?
Share capital 1 000
Retained earnings 210 973

Additional information:

All amounts exclude VAT except where indicated otherwise.

1. Revenue amount includes the following transaction:

- Prepayment of R 50 000 made by the customer at 30 June 2017 for goods
that APTY will only be able to deliver during December 2017 due to non-
availability of stock.
- Sale of R 45 000 (VAT Inclusive) made to VV incorporated and was
offered trade discount of 5%. VV paid in cash at the transaction date. The
effect of discount has not been taken into account in the recording.

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 2. Princh declared total dividends of R500 000 on 30 June 2017, these dividends
are payable to shareholder on the 1 August 2017. APTY holds 71% of Princh
shareholding. Dividends declared by Princh have not been recorded in the
books of APTY. The shares were bought from surplus income.

3. APTY pays interest at 11.236% p.a to Shyla bank for the loan. The loan was
taken on the 1 July 2016.

4. Inventory with a cost of R150 000 had a net realisable value of R 129 000 at

year end. No entry has been passed to account for inventory write down.
During the previous financial year this Inventory was written down by R20 000
to its Net Realisable Value.

5. Included in the Administrative cost are the following:

- Dividends payment of APTY amounting to R109 000.
- R157 895 advertising cost paid for the next 12 months. The payment was
made on the 30 June 2017.

6. APTY bought an equipment on the 1 April 2017 at R 500 000 (VAT Incl.), the
vehicle was available for use in the manner intended by management on the
same date. The equipment depreciates at 20% p.a, straight line method as
per the accounting policy of the company. No entry has been recorded to
account for this depreciation.

7. Investment with Princh had fair value of R1 150 000 at year end.

8. The income tax expense for the year under review has been correctly
calculated to be R 150 000.

YOU ARE REQUIRED to prepare a Statement of profit or loss and other

comprehensive income together with applicable Notes of APTY Limited for the year
ended 30 June 2017 in accordance with requirements of IFRS.

NB: Ignore any comparatives, ignore VAT except where VAT is mentioned
and round off your amounts to the nearest R1.
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 QUESTION 6

The following information has been extracted from the financial records of Jonny
Limited at 31 December 2017, its financial year end:
Note R
Building 1 536 000
Investments, at cost 4 245 000
Goodwill 65 000
Bank overdraft 5 674
Petty cash 4 500
Plant and equipment, at cost (1/1/2017) 2 540 000
Vehicle, at cost 440 000
Accumulated depreciation on plant and equipment (1/1/2017) 160 000
Accumulated depreciation on vehicle (1/1/2017) 72 000
Trade receivable 184 000
Provision for doubtful debts 12 330
Ordinary share capital (R1.50 each) 600 000
15% Preference share capital (R2 each) 300 000
Inventory on hand 420 000
Loan – VK Limited 5 240 000
Trade payable 550 471
Profit before tax after all adjustments are being taken into
account 205 000
General Reserve (01/01/2017) 48 000
Provisional tax paid 8 96 000
10% Debentures 6 440 000
Retained earnings (01/01/2017) 174 000

Additional information:
1. Building is situated at ERF 46, Ackerville in Mpumalnga and it was bought on
15 March 2015 at cost price of R536 000. On 16 July 2017 this building was
revaluated by an impartial authority of property valuation, Ms Setso, at R 746
000. No entry relating to this revaluation was made. No depreciation was
provided on building.

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 2. New equipment was purchased on 1 December 2017 for R82 000.
3. It is the company’s policy to calculate depreciation on plant and equipment at
15% p.a. on a straight line method and vehicle at 25% p.a. on a reducing
balance method. It is the company’s policy not to depreciate buildings.
4. Investments consist of:
23 000 of 50 000 issued ordinary shares of R3.50 each in VK Limited (Market
value at 31 December 2017 is R141 000). Shares were acquired through
surplus funds.

33 000 of 85 000 issued ordinary shares in JJ Limited of R4.50 each (Market

value at 31 December 2017 is R164 000). Shares were acquired through
surplus funds.

16 000 of 35 000 issued ordinary shares in AB Limited of R1 each R30 000

(Director’s valuation at 31 December 2011 is R 27 000). Shares were
acquired through surplus funds.
5. Loan to VK Limited is interest free and it will repayable on the 28 th February
2019.
6. 10% Debentures must be redeemed in five years equal installments.
Debentures are secured by mortgage bond registered over land and
buildings.
7. The final ordinary dividend of 20 cents per share was declared. An interim
ordinary dividends of R32 000 was paid during the year .Preference dividends
were declared and are yet to be recorded.
8. SA normal tax for the year ended 31 December 2017 is calculated correctly at
R143 000 and still to be recorded in the books.

YOU ARE REQUIRED to prepare the Statement of financial position and Statement
of changes in equity of Jonny Limited as at 31 December 2017 in compliance with
the requirements of Companies Act 71, 2008 and International Financial Reporting
Standards (IFRS).

NB: Show Property, plant and equipment note as at 31 December 2017.

FAC22AT/2021/FINANCIALS Page 15
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 QUESTION 7

Move Limited (Move) is a South African company listed on the JSE. Move
manufactures all types of clothes from casual to formal wear for all age groups and
serves the diverse needs of community both locally and abroad. Move has elected to
early adopt IFRS 15 and not IFRS 16. The financial year of Move ends on the last
day June each year. Move is a registered VAT vendor.

The following information relates to the accounting records of Move. The Chief
Financial Officer of Move is in the process of preparing a set of Financial Statements
for the year ended 30 June 2017, he has requested your assistance in calculating
other figures to be disclosed in the Financial Statements and also to prepare for his
review a Statement of Profit or Loss and Other Comprehensive Income.

Additional information:

1. Revenue figure is R22 230 000 (Vat inclusive).This amount includes the

following:
Future Clothing (Pty) Ltd bought goods to the amount of R50 000 from Move
on 1 May 2017 on credit (ignore discount implications). On 15 June 2017,
Future clothing (Pty) Ltd appeared to be in financial difficulty and on 30 June
2017 was declared insolvent. The curator notified Move that it will receive only
10c in the Rand.

2. Other income includes the following transaction:

R300 000 of dividends received from Shekinah Clothing Limited, the
shareholding was acquired through surplus funds. This investment was
acquired for R1 200 000 in cash, at 30 June 2017 the value of this investment
was R1 800 000.

3. The cost of sales of Move is as follows:

- Move had the opening balance of inventory of R2 500 000 as audited by one
of South African reputable auditors.
- The company incurred the following during the year on its stock:
Purchase of raw materials from local suppliers R5 350 00 000

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 Conversion cost incurred during the year amounts to R2 500 000
- Move had a closing stock worth of R3 677 500 at year end.
- The remaining stock at year-end had a net realisable value of R3 000 000,
Inventory write down has not been accounted for.

4. Distribution costs
According to records of Move, distribution cost amounts to R1 900 000.

5. Administrative costs
The assistant to the accountant has calculated the administrative cost as
R2 100 000, this amount includes the following expenses:
 R90 000 advertising costs paid to one of the television channel to prod cast
the new clothing fashion style introduced by Move. The advertisement cost is
for the period of 12 months from 1 July 2017, which is the date when the
money was paid.
 Profit on sale of one of Move’s old sewing machine. The machine had a cost
price of R1 000 000 (VAT Incl.) and an opening accumulated depreciation of
R701 754. The machinery was sold on 31 May 2017 for R190 000 and
depreciated on a straight line method using its estimated useful life of 10
years and it has R nil residual amount. Current year’s depreciation for this
machine has not been accounted for.

6. Finance costs, Move has paid interest of R490 000 for its long term debt
received for Xhimba Bank.

7. Taxation, the accountant has correctly calculated income tax expense as

R1 090 369.

8. VAT is calculated at 14%.

YOU ARE REQUIRED to prepare a Statement of profit or loss and other

comprehensive income together with applicable Notes of Move Limited for the year
ended 30 June 2017 in accordance with requirements of IFRS.

NB: Ignore any comparatives.

Ignore VAT except where VAT is mentioned.

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 QUESTION 8

After the year-end adjustments and closing of all the nominal accounts the following
balances appeared in the trial balance of BLF Limited at 31 December 2013:

Notes R
Share capital – Ordinary shares 1 180 000
Share capital – 9% Preference shares 1 250 000
Loan from Trust Bank 2 321 410
Bank overdraft (The net of both accounts) 3 22 430
Retained earnings (R44 580– 31 December 2012) 182 822
Shareholders for dividends 4 ?
Revaluation on land and buildings 5 ?
South African Revenue Service payable 32 318
Property, plant and equipment 5 742 000
Investment 6 57 480
Inventory 360 000
Trade receivables 108 000

Additional Information:
1. Authorised share capital consists of the following:
- 100 000 Ordinary shares
- 100 000 9% Preference shares

Issued shares
-100 000 Ordinary shares of R1.80 each
-125 000 9% Preference shares of R2.00 each

2. The loan from Trust Bank must be repaid in three equal payments before the 31
December for the next five years. Interest for the financial year, calculated at
15% was already paid. The loan is secured by a first mortgage bond registered
over fixed property of the company.

FAC22AT/2021/FINANCIALS Page 19
3. Cash in bank consist of two bank accounts. On 31 December 2013 the one
account at JJ bank had a favorable balance of R3 440 while the other one at BP
bank have an overdraft facility up to R25 870.

4. On 31 December 2013 the company made provision for ordinary dividends of 8c

per share as well as the preference dividends. No interim dividends paid during
the financial year.

5. Property, plant and equipment consist of land and buildings. The property is
situated at 11 Mokopane Limpopo. The property was bought on 8 August 2007
for R482 000. On 06 December 2013 the property was valued at R742 000 by
Mr. Valuable, a sworn appraiser. The necessary entries in this regard were
made in the books.

6. Investment consists of the following:

A Limited B (Pty) Limited

Cost price R11 000 R46 480

Market value R12 000 R0
Directors valuation R0 R57 480

Number of shares 10 000 15 000

Dividends paid during the year 15c/share 0
Dividends declared end of year 0 80c/share

YOU ARE REQUIRED to prepare the statement of financial position and statement
of changes in equity of BLF Limited at 31 December 2013 in accordance with the
requirements of the Companies Act 71 of 2008 and IFRS.

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