Question 1

Ntlale Limited had the following balances on 1 April 2013:

Land and Buildings at cost Note 1 R1 000 000

Equipment at cost 2 50 000

Notes:

1. Land and buildings situated at 2563 Letsebela street, Hillside View, Bloemfontein are
represented by:
Land at cost (1/4/2007) R550 000
Buildings (1/4/2008) 450 000

On 1 April 2013, Mr Mophiring, an independent sworn appraiser valued land to the

value of R580 000.

2. Equipment was purchased on 1 April 2010. A new equipment was purchased on 31

March 2014 for an amount of R100 000.
3. Depreciation is written off according to the following methods:
Land: Not depreciated
Buildings: 5% per annum on the straight line method
Equipment: 25% per annum on the diminishing balance method

Required:

Prepare the notes for Property, plant and equipment for Ntlale Limited for the year ended 31
March 2014. Show all calculations.

Question 2

As the accountant of Tshwane Ltd, a summary of property, plant and equipment at 1 July
2014 has been presented to you, for the year ended 30 June 2015:

Furniture
Cost 22 000
Accumulated depreciation 8 000

Motor vehicle
Cost 60 000
Accumulated depreciation 31 000

Machinery
Cost : Machine A 15 000
Machine B 63 000
Machine C 18 000

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 Accumulated depreciation : Machine A 7 000
Machine B -
Machine C 3 000

Land
Cost 150 000

Additional information:

1. The following rates and methods of depreciation are applicable:

Land - no depreciation
Furniture - 10% straight line
Motor vehicle - 20% straight line
Machinery - 20 diminishing balance
2. On 31 December 2014 a delivery vehicle, cost R18 000 was sold for R7 500. At 1
July 2014 the accumulated depreciation of the vehicle amounted to R11 000.
3. Machine B was obtained and ready for use on 30 June 2014 but was put into operation
on 30 August 2014.
A new machine (machine D) was purchased for R35 500 on 1 January 2015.
4. Land, situated at stand 45, Industria area, Rosslyn, Pretoria, was purchased in 2010.
The current market value of the property was R200 000 at 30 June 2015.

Required:

Prepare the notes for Property, plant and equipment for PPE Limited for the year
ended 30 June 2015 in compliance with the requirements of Companies Act 71 of
2008 and IFRS.

Question 3

The following information has been extracted from the financial records of PPE Limited at
31 December 2013,

R
Ordinary share capital 2 300 000
Investment 100 000
Land and buildings 1 ?
Machinery at cost 2 1 150 000
Equipment at cost 3 225 000
Furniture at cost 4 450 000
Accumulated depreciation: Machinery(1/1/2013) 62 500
Accumulated depreciation: Equipment (1/1/2013) -
Accumulated depreciation: Furniture (1/1/2013) 90 000
Inventory 40 000

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 Accounts receivables 60 000
Allowance for doubtful debts 10 000
Long-term loan 5 140 000
Accounts payables 40 000
Dividends declared 10 000
Dividends paid 5 000
Cash and cash equivalent 70 000
Retained earnings (1/1/2013) 450 000
Profit before tax 700 000
Income tax 225 000

Additional information:

1. Land and buildings are situated on 256 Metro Street, Montana, Pretoria. Land was
acquired on 1 January 2012, at a cost price of R750 000.
On 1 June 2013, Mrs L. Mophiring, an independent sworn appraiser, valued land
at R1 150 000.
On 31 December 2013, a building to the value of R1 000 000 was completed on
the land.
Depreciation is calculated at 5% per annum on straight line method.
2. Machinery were acquired on 1 January 2012 at a cost of R1 250 000.
A machine, with carrying value of R231 250, was sold for R235 000 on 30 June
2013.
New machine was purchased on 31 December 2013 for R150 000.
Depreciation is calculated over a period of 20 years on straight line method.
3. Equipment were acquired on 1 January 2013 for R200 000. On 31 December
2013, a new equipment was acquired for R25 000.
Depreciation is calculated at 10% per annum on reducing balance method.
4. Furniture were acquired for R450 000 on 1 January 2012.
A furniture, cost price of R150 000, was written off on 30 September 2013.
New furniture was purchased on 1 November 2013 for R150 000.
Depreciation is calculated at 20% per annum on straight line method.
5. The long-term loan was entered into on 1 January 2013 and is repayable in five
equal instalments as from 1 January 2014. The interest is charged at 10% per
annum and it is payable monthly.

Required:

Prepare the notes for Property, plant and equipment for PPE Limited for the year
ended 31 December 2013 in compliance with the requirements of Companies Act
71 of 2008 and IFRS.

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 Question 4

TUT Limited, a VAT vendor, has been manufacturing luxury goods for couple of
years. The following information is supplied to you:

1. Land and buildings

Land was purchased for R2 000 000 on the 1 March 2009. It is situated at
Stand 321, Rivonia Park, Centurion, Pretoria. The market value of this land
was adjusted by the independent sworn, Mrs Mguni, to the value of
R4 000 000 during the current year.

Building was erected to the value of R1 710 000 (VAT included at 14%) on
the above land. The building was completed and ready for use on 1 March
2010. New building was also erected on the same land, completed and ready
for use on 1 June 2014 amounting to R500 000.

There is no depreciation for land. While building is depreciated at 10% per

annum on the reducing balance method.

2. Manufacturing equipment
All manufacturing equipment were purchased on 28 February 2011, for
R4 500 000.

Additional manufacturing equipment was purchased on 1 March 2012 for

R500 000. The installation and inspection costs amounted to R50 000 and
R50 000 respectively, were incurred to bring the equipment into the current
conditions.

One piece of the older manufacturing equipment (cost R200 000), purchased
28 February 2011, was completely destroyed in a fire on 30 September 2014.

A new equipment was purchased for R150 000 on 1 January 2015.

Manufacturing equipment is depreciated over 5 years (straight line).

Required:

Prepare the notes for Property, plant and equipment of TUT Limited for the year ended 28
February 2015 in compliance with the requirements of Companies Act 71 of 2008 and IFRS.

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 Question 5

The following information has been extracted from the financial records of UP Limited at 31
December 2011, its financial year end:

Machinery: Cost(31/12/2011) 2 300 000

Accumulated depreciation (1/1/2011) 125 000
Land at valuation ?
Equipment: Cost (31/12/2011) 450 000
Accumulated depreciation (1/1/2011) -
Furniture: Cost (31/12/2011) 900 000
Accumulated depreciation (1/1/2011) -

Additional information:

1. Machinery were acquired on 1 January 2010 at a cost price of R2 500 000.

A machine, cost R500 000, was sold on 30 June 2011 for R470 000.
A new machine was purchased on 31 December 2011 for R300 000.
Depreciation on machinery is calculated over a period of 20 years on a straight line
method.
2. Land was acquired on 1 January 2010, cost price of R1 500 000. On 1 January 2011,
Mrs L. Pass, an independent sworn appraiser, valued land at R2 300 000. Land is
situated on ERF 140, Pretoria.
3. Equipment were acquired on 1 January 2011 for R400 000.
New equipment was acquired on 30 December 2011 for R50 000.
Depreciation is calculated at 10% per annum on reducing balance method.
4. Furniture and fittings were acquired on 1 January 2011 for R1 000 000.
A furniture, cost price R400 000, was written off on 30 September 2011.
New furniture was purchased on 1 November 2011 for R300 000.
Depreciation is calculated at 20% per annum on straight line method.

Required:

Prepare the notes for Property, plant and equipment of UP Limited for the year ended 31
December 2011 in compliance with the requirements of Companies Act 71 of 2008 and
IFRS.

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 Question 6

The following information has been extracted from the financial records of Castle Limited at
31December 2015, its financial year:

Land and buildings, at cost price 512 000

Goodwill, at cost price 40 000
Equipment, at cost price (31/12/2015) 302 400
Accumulated depreciation on equipment (31/12/2015) 1 200
Loan to Alfa Ltd 78 000
Delivery vehicle, at cost price 134 000
Accumulated depreciation on delivery vehicle (01/01/2015) 25 400

Additional information

1. Land and buildings

The land is situated at No. 17 Second Avenue, Mbombela and was bought on 8 May
2010 at a cost price of R376 000.

On 1 January 2011 a warehouse was erected on the same land at a cost of R136
000.

On 31 December 2015 the above mentioned land was revalued by an impartial

authority of property valuations at R500 000. No entry relating to this revaluation was
made.

Depreciation on building is calculated at 5% per annum, using the straight line

method.

2. Equipment

Equipment with a cost price of R100 000 and accumulated depreciation of R90 000,
on the date of sale, was sold during the year.

A new equipment, costing R50 000 was purchased on 31 December 2015.

Depreciation of R30 000 was written off on equipment during the financial year.

3. Deliver vehicle

A delivery vehicle was sold on 31 August 2015 for R54 000. The cost price and
accumulated depreciation at 01 January 2015 were R74 000 and R12 800
respectively. Depreciation on delivery vehicle is calculated at 20% per annum on
reducing balance method.

4. Machine

The machine was purchased for R298 000 in cash on 1 February 2015 but needed to
be installed before it could be used. The installation cost R10 000 and was also paid
for in cash.

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 The machine was in a condition ready for use in the manner intended by the
management on 1 May 2015. It was brought into use on 1 June 2015.

It has an estimated useful life of 3 years and a residual value of R44 000.

Required:

1) Disclose the Property, plant and equipment note to the financial statements of Castle
Limited for the year ended 31 December 2015.

Show all calculations.

Question 7

The following balances are taken at 28 February 2002 from the books of Kind Ltd a
company that manufactures tables:

R
Furniture and fittings at carrying amount (28/02/2002) 18 000
Machinery and equipment at carrying amount (28/02/2002) 136 000
Vehicles at carrying amount (28/02/2002) 30 000
Land and buildings at valuation 280 000
Revaluation reserve 40 000
20% Mortgage over land and buildings (redeemable 2007) 70 000
Loan to Jack Ltd 35 000

Additional information:

1. Furniture and fittings were obtained on 1 March 1996. Depreciation of R4 500 is

written off annually on straight line basis.

2. Machinery and equipment were obtained on 1 June 2000. Depreciation is yearly

provided for at 20% per annum on reducing balance method.

3. Depreciation on vehicles is provided for at 20% per annum according to straight line
method. The vehicle was obtained on 1 September 1999.

4. Kind Ltd’s policy is to revalue land and buildings every three years at market value.
The following information is available in the assets register:

Obtained in 1996 R240 000

Revaluation on 1 February 1999 R40 000
Revaluation on 1 February 2002 (but not yet recorded) R70 000
R350 000

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Required:

Disclose the Property, plant and equipment note to the financial statements of Kind
Limited for the year ended 28 February 2002.

Show all calculations.

Question 1

NOTES TO STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2014

Property, plant and equipment

Land Buildings Equipment Total

Carrying amount
(1/4/2013) 550 000 337 500 21 094 908 594
Cost/Revaluation 550 000 450 000 50 000 1 050 000
Accumulated
depreciation 0 (112 500) (28 906) (141 406)

Depreciation 0 (22 500) (5 274) (27 774)

Additions 0 0 100 000 100 000
Disposal 0 0 0 0
Revaluation
surplus 30 000 0 0 30 000
0 0 0 0
Carrying amount
(31/3/2014) 580 000 315 000 115 820 1 010 820
Cost/Revaluation 580 000 450 000 150 000 1 180 000
Accumulated
depreciation (135 000) (34 180) (169 180)

Land and buildings are situated at 2363 Hillside View, Bloemfontein. Buildings were valued
to the value of R580 000.

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 Question 2

1. Property, plant and equipment

Land Furniture Motor Machinery Total

vehicles
Carrying amount
at the beg 150 000 14 000 29 000 86 000 279 000
Cost price 150 000 22 000 60 000 96 000 328 000
Accumulated dep - (8 000) (31 000) (10 000) (49 000)
Revaluation 50 000 - - - 50 000
Depreciation - (2 200) (10 200) (17 200) (29 600)
Disposal during
the year - - (5 200) - (5 200)
Carrying amount
at the end of the
year 200 000 11 800 13 600 68 800 294 200
Cost 150 000 22 000 42 000 96 000 310 000
Acc dep/reval 50 000 (10 200) (28 400) (27 200) (15 800)

Land consisting of stand 45, Industrial, was purchased in 2000. On 30 June 2005 the market
value of Land amounted to R200 000.

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 Question 3

NOTES TO STATEMENT OF FINANCIAL POSITION AS AT 31

DECEMBER 2013
Property, plant and equipment
Land Buildings Machinery Equipme Furniture Total
nt
Carrying 750 000 - 1 187 500 - 360 000 2 297 500
amount at the
beginning
Cost 750 000 - 1 250 000 - 450 000 2 450 000
price/Revalua
tion
Accumulated - - (62 500) - (90 000) 152 500
depreciation
Depreciation - - (56 250) (20 000) (87 500) (163 750)
Revaluation 400 000 - - - - 400 000
Disposal - - (231 250) - (97 500) (328 750)
Addition - 1 000 000 150 000 225 000 150 000 1 525 000
Carrying 1 150 1 000 000 1 050 000 205 000 325 000 3 730 000
amount at the 000
end
Cost 750 000 1 000 000 1 150 000 225 000 450 000 3 575 000
price/Revalua
tion
Accumulated 400 000 - (100 000) (20 000) (125 000) 155 000
depreciation

Land and buildings are situated at 256, Metro Street, Montana. Land was originally
acquired on 1 January 2012, whiles buildings were acquired on 31 December 2013.
Land was revalued on 1 June 2013.

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