ACCOUNTING

GRADE 12

[DOCUMENT TITLE]

FIXED/TANGIBLE ASSETS

MARKING
GUIDELINES

1. Purpose of the Accounting Practice Activities:

To give learners quality Practice Activities in order to improve learner performance in Accounting in
Limpopo Province.

2. How to us this booklet

2.1 The Practice Activities are grouped per topic and are mandatory for all Accounting learners.
2.2 Each topic has a number of similar activities that are standardized to train learners for formal tasks
2.3 Teachers must work out these activities before giving them to learners.
2.4 Print the Practice Activities and their Answer books and give them to learners as written work.
NB: Do not give learners Marking Guidelines to Activities, but instead, assist them with feedback.

3. Message to Grade 12 Accounting teachers:

3.1 Accounting Practice Activities have been extracted from past exam papers and arranged according to topics.
3.2 Practice Activities must be given to learners as, and when, a particular topic is being taught.
3.3 Use these Practice Activities as Class work, Informal Tests and/or for Revision purposes.
3.4 Departmental monitors will be asking for these Activities to check content coverage.
3.5 Other Activities may be given to learners in addition to these Mandatory Practice Activities.
MARKING GUIDELINES TO THE FIXED ASSETS PRACTICE ACTIVITIES

ACTIVITY 1: FIXED/TANGIBLE ASSETS (45 marks; 34 minutes) NSC Nov 2019, Q4

1.1. CALCULATIONS FOR DEPRECIATION (SON)

EQUIPMENT (15% on cots)
Old Equipment New Equipment (Oven)
2 old equipments 3 months: 1 Dec to 28 Febr
50 000 – (R1 x 2) = 49 998  250 000 x 15% x 3/12 = 9 375 
NB: R1 residual value/ Its Acc.depr. not to exceed its CP/ its New oven bought 1 Dec 2020. Used for 3 months from
curr.depr not to exceed its CV. Use SON calculations (New, Old 1 Dec to 28 Febr.
& Sold asset (2) (3)
VEHICLES (20% on dim. Balance method)
SOLD:

Year 1: 300 000 x 20% = 60 000 

Depr for year 1

Year 2: (300 000 – 60 000) x 20%  = 48 000 
240 000

(Depr. For year 1 + year 2) (1 March to 1Sept) 6 months

Year 3: (300 000 – 60 000 – 48 000) x 20%  x 6/12 = 19 200 
192 000 (8)
New Vehicles (Two):
  
(325 000 x 2) x 20% x 9/12 = 97 500 depreciation on new vehicle
650 000 9 months: 31 May to 28 Febr. 2020 (3)
1.2. CALCULATE PROFIT/LOSS ON SALE OF ASSET
CP - Acc. Depr. On vehicle sold: 127 200  vehicle sold
300 000 – (60 000 + 48 000 + 19 200) – 220 000 = 47 200 profit on sale of asset
CP Acc. depr 172 800 SP

OR (5)
Asset Disposal Account
Vehicle 300 000 Acc depr on Vehicles 127 200
(60 000 + 48 000 + 19 200)
Profit on sale of an assets 47 200 Bank 220 000

347 200 347 200

Fixed/Tangible Assets – Marking Guidelines 2 | 12

1.3 COMPLETE THE TANGIBLE ASSETS NOTE (A-G)
A Carrying value of Vehicle sold
300 000 – (60 000 + 48 000 + 19 200) = 172 800 
127 200
Cost – Acc depr = .CV
2

B Current Depreciation on Vehicles

On V sold 
On V remaining
19 200 + 97 500 = 116 700 (Current depreciation on Vehicles) 2
C Current Depreciation on Equipment

Old Equipment New Equipment
49 998 + 9 375 = 59 373 (Current depreciation on Equipment) 2
Curr Depr Curr depr

D Cost of Vehicles on 28 February 2021

Open bal. Purchased Sold
300 000 + 650 000 – 300 000 = 650 000  (bal. at begin + New – Sold
2
950 000
E Accumulated Depreciation on Vehicles on 28 February 2021

Acc depr before sale Current depr. Accu depr of Asset sold Acc dep
rem asset 4
(60 000 + 48 000 + 19 200 + 97 500) – (60 000 + 48 000 + 19 200) = 97 500
108 000 + 116 700  – 127 200  
F Accumulated Depreciation on Equipment on 28 February 2021

Acc depr at begin Current depr

350 000 + 59 373= 409 373Accumulated depreciation on Equipment at 3
end
G Cost of extension to land and buildings during the year

Cost at end – Cost at beginning Additions at cost

1 000 000 – 800 000 = 200 000  3

1.4 Calculate Amount that will appear on the face of the balance sheet
Carrying value of L&B + Vehicles + Equipment Carrying Value at end
1 000 000 + 650 000 + 650 000 = 2 300 000 
2

TOTAL MARKS

45

Fixed/Tangible Assets – Marking Guidelines 3 | 12

 ACTIVITY 2: FIXED/TANGIBLE ASSETS (19 marks; 14 minutes) ASC Nov 2015, Q4

2.1 Write only the letter (A–E) next to the question number.

4.1.1 E

4.1.2 C

4.1.3 D

4.1.4 B
4

PHUTI TRADERS

2.2 Prepare the Asset Disposal Account for the trade-in on 1 December 2021
GENERAL LEDGER OF PHUTI TRADERS

ASSET DISPOSAL ACCOUNT

2021 1 Equipment 142 000 2022 28 Acc depr on Equipment 64 752
Mar.  Febr (142 000 – 77 248)
Creditors control  56 300
Balancing figure
Loss on sale of asset 20 948
142 000 142 000
One part correct

(6)

2.3 Calculate the following:

WORKINGS ANSWER
(i) Additional land and buildings
360 000 
1 860 000 – 1 500 000 One part correct 2
(ii) Accumulated depreciation on vehicles
490 000 
740 000 – 250 000 One part correct 2
(iii) Additional vehicle
330 000 
1 070 000 – 740 000 One part correct 2
(iv) Total depreciation on vehicles
(iii) above
330 000 x 15% x 4/12 = 16 500 127 500 
One part correct
740 000 x 15% = 111 000  3

TOTAL MARKS

15

Fixed/Tangible Assets – Marking Guidelines 4 | 12

ACTIVITY 3: FIXED/TANGIBLE ASSETS (30 marks; 23 minutes)
3.1 Indicate whether the following statements are true or false.

3.1.1 False
3.1.2 False
3.1.3 True 3

3.2. SA CAPENTERS
3.2.1 Do a calculation to proof that the diminished balance-method of
depreciation is used for vehicles.

Workings Answer
(780 000-52 000) two marks 72 800
728 000 x 10% One part correct 4

3.2.2 REFER TO INFORMATION D

 Calculate the missing figures denoted by (i) to (iv).

Workings Answer
(i) 780 000 – 124 800 655 200
(ii) 3 000 000 – 750 000 2 250 000
(iii) See (i) above
655200 2  327600

Remaining vehicle:
327 600 x 10% = 32 760

Vehicle sold:
See above
9
327600 10%   24570 
12 57 330
(iv) 40 000 + 250 000 – 60 500 229 500 11
 Indicate if a profit or loss was made on the disposal of the vehicle. Do a
calculation to support your answer.

Workings Answer

Profit/Loss depending on calculations

310 000 – (390 000 – 62 400 - 24 570)  6 970
303 030 three marks One part correct 6

Fixed/Tangible Assets – Marking Guidelines 5 | 12

3.2.3 REFER TO INFORMATION E.

 Calculate the percentage increase in the value of the properly as at 29

February 2020
Workings Answer

450 000  + 3 000 000 x 100  15% (4)

 Explain why you would not agree with this partner. Provide ONE point with
reference to a GAAP principle
Any valid point with reference to the GAAP principle

Part marks for incomplete / partial answer

 All fixed assets should be recorded at their original cost and not their
estimated worth, according to the historical cost rule
(2)

[6]

TOTAL MARKS

30

Fixed/Tangible Assets – Marking Guidelines 6 | 12

ACTIVITY 4: FIXED/TANGIBLE ASSETS 23 marks; 17 minutes

4.1 Calculate the missing amounts/details labelled A to G in the given

General Ledger Accounts. Show full calculations (where necessary) so
part marks can be awarded.
(12)
A Creditors control

B R360 000

C Asset disposal

D Bank

E 8
120000 20%   10000  No part mark
12

F 360 000 – 120 000=240 000 x 20%=48 000

6
180 000 x 20% x  18000 
12
48 000 - 18 000 = 66 000

G Profit and Loss

4.2 Prepare the Asset Disposal Account in the General Ledger for the sale of
Equipment on 1 November 2016.
(9)
ASSET DISPOSAL ACCOUNT

2016 1 Equipment 120 000  2016 1 Accumulated depreciation 24 000 

Nov. Nov. on Equipment
Bank  Balancing figure 86 500
Loss on sale of asset 9 500
120 000 120 000

4.3 Provide ONE suitable reason for the equipment being sold as soon after it
was purchased. (4)
Part marks for unclear/incomplete explanation. Accept short explanation; may be phrased
differently
 It was not suitable for the needs of the business
 Poorly taken decision rescinded/reversed
 The equipment may have been unreliable/unproductive/not working
condition
 Any logical answer

Fixed/Tangible Assets – Marking Guidelines 7 | 12

ACTIVITY 5: FIXED/TANGIBLE ASSETS (16 marks; 12 minutes) NSC Nov 2019, Q4
Calculate:
(i) Depreciation for the current year
Workings Answer
192 000  x 20% x 8/12  One part correct
R25 600 
5
(ii) Carrying value of vehicles sold
Workings Answer
  Two marks

192 000 – 25 600 see (i) above R166 400

If wrong, mark workings.
60 000 + 48 000 + 25 600
Cannot get full marks if
OR: 300 000 – 133 600 superfluous workings
5
Calculate: Profit/loss on sale of asset
Workings Answer
  Two marks

175 000 – 166 400 see (ii) above R8 600

If wrong, mark workings.
Cannot get full marks if
superfluous workings
2
Calculate: Fixed assets carrying value on 28 February 2019
Workings Answer
  See (i) above  see (ii) above
10 170 000 – 25 600 – 166 400

192 000 two method marks

OR: 10 170 000 – (300 000 – 133 600 + 25 600) One part correct
One mark one method mark one method mark
R9 978 000 
Also accept ledger account format
10 170 000 25 600
166 400
9 978 000
4

TOTAL MARKS

16

Fixed/Tangible Assets – Marking Guidelines 8 | 12

ACTIVITY 6: FIXED/TANGIBLE ASSETS (21 marks; 16 minutes) NSC 2019, Q4

MEDUPI LIMITED
Calculate missing figures (i) to (v).
6.1 Workings Answer
(i) (1) 610 000
(ii) 12 997 
One mark for:
13 000 – R1 x 3 R12 999 or R13 000
(2)
(iii) one part correct
New: 172 500 x 10% x 4/12  = 5 750 
Old: 1 250 000 x 10% = 125 000  (5)
OR: 83 333 47 417
(1 250 000 x 10% x 8/12) + (1 422 500 x 10% x 4/12) 130 750 
one mark one mark one mark one mark one part correct

(iv) (48 000 x 20% x 7/12) 42 400 

176 000 – (128 000  + 5 600 ) one part correct
one part correct
133 600 three marks (5)
(v) (128 000 + 5 600) both
800 000 + 256 000 – 133 600 see above
922 400 
(4) one part correct
17

6.2 Explain how the internal auditor should check that movable fixed
assets were not stolen.
Any ONE point  Part-marks for unclear / incomplete answers

• Conduct physical inspection (regular and random)

• Compare to fixed asset register
2

6.3 As an independent auditor, what advice would you give? Provide ONE
point.
ONE valid point  Part-marks for unclear / incomplete answers
 GAAP prescribes the historical (original) cost principle when recording assets
and only recognising profits and/or losses on disposal (i.e. prudence).
 IFRS provides for revaluation (fair value) provided that this estimate can be
measured reliably (evidence).
 Essentially, financial statements must not be overstated to create a false
impression on profitability
 There could be tax implications. 2

TOTAL MARKS

21

Fixed/Tangible Assets – Marking Guidelines 9 | 12

ACTIVITY 7: FIXED/TANGIBLE ASSETS (27 marks; 20 minutes) LP NSC JUNE 2019, Q2

7.1 Calculate the cost price of the delivery vehicle traded in on

31 August 2015

1 120 000 + 450 000–1 270 000 =300 000 operation one part correct 4

7.2 Calculate the trade-in amount received for this vehicle on 31 August
2015.

300 000 – 108 000 – 19 200 = 172 800  check operation

5

7.3 FIXED ASSET NOTE

Land and
Vehicles Equipment
Buildings
Carrying value (1 March 2015) 5 715 000 660 000 282 000
Cost 5 715 000 1 120 000 480 000
Accumulated depreciation (0) (460 000) (198 000)
Movements
Additions (at cost) 700 000 450 000 56 000
Disposals (at carrying value) (400 000)  (172 800) (0)
Depreciation Equipment (0) (157 800) (74 100) *
Carrying value (29 February
6 015 000 779 400 263 900
2016)
Cost 6 015 000 1 270 000 536 000
Accumulated depreciation (0) (490 600)  272 100

TOTAL MARKS

18

Fixed/Tangible Assets – Marking Guidelines 10 | 12

ACTIVITY 8: FIXED/TANGIBLE ASSETS (30 marks; 23 minutes) LP NSC JUNE 2019, Q2

8.1 Calculate the figures indicated by A – E. Show all your calculations.

A 300 000 + 75 000 + 325 000 (2)  700 000

Two or nothing

7 200 000 + 700 000 (see A) (1)

B  7 900 000

C 130 000 – 100 000 (2)  30 000

37 500  + 30 000  (see C) – 13 750  53 750

D One part correct
OR: 130 000 - (62 500 + 13 750) (4)

103 500 + 250 000 – 103 500 (2)  62 500

E
Two or nothing
11

8.2 Refer to information B.

A similar building in the area was recently sold for R11 million. Would you
adjust the value of Land and Buildings in Perez Ltd’s books? Explain your
answer.

No 

The Historical cost principle  dictates that a fixed asset must be recorded
at the cost price, not on the expected value. 

GAAP principle must be mentioned (one mark) with an explanation (one mark). 3

8.3 Refer to information C.

Calculate the rate that is used to depreciate equipment.

Acc depr 62 500 / 5 years = 12 500 depr per year

Depr 12 500 / cost price 100 000  x 100 = 12,5% per year  one part correct
4

Fixed/Tangible Assets – Marking Guidelines 11 | 12

8.4 Refer to Information D.
8.4.1 How old was the vehicle when it was sold?
Year 1: (184 000 – 0) x 25% = 46 000 
80 500 (as per
note)

Year 2: (184 000 – 46 000 above) x 25% = 35 500 

Thus, the vehicle was bought 2 year ago.  4

8.4.2 Provide any TWO reasons why the company would have sold this
vehicle.
Any TWO acceptable reasons 
 Vehicle’s maintenance was too high
 Vehicle was heavy on fuel
 A newer model was available
 A good/competitive price was received
 Any acceptable answer.
2
8.4.3 On which date was the new vehicle bought?

28 February 2017
OR 1 March 2018 
(because depreciation of R62 500 was for the whole year or the acc depr is for the one
vehicle only and it is R62 500 for the whole year)
2
8.5 As the internal auditor, you have picked up that the cost price of
the new vehicle has been inflated, when compared to similar
vehicles of the same make, year and model.
You also noted that the car dealer gave the accountant expensive
accessories to his personal car, and this was not disclosed.
Comment on this and what you think happened.
 It seems as if the accountant and the car dealer made a deal for
the company to purchase the vehicle at a higher price and in return
the accountant received accessories to his vehicle as
compensation. 
 This is suspicious / unethical / illegal / he will get a warning / he will 4
be fired / any acceptable answer indicating that this is not an
acceptable practice. 

TOTAL MARKS

18

Fixed/Tangible Assets – Marking Guidelines 12 | 12