2
QUESTION + (25 MARKS)
[Nymeria Lid is @ motorcycle accessory menufactunng ently specialising n performance
‘exhausts for KTMB motorcycles,
(0n 4 Januaty 2015 the share capital of Nymera Li conshted of the folowing
Class A (ordinary) share capital Number of shares
Authorised share capital, 1500 000
feeued share capital ‘850.000
less B share capital
(Cumulative non-redeemable 12% preference shares)
‘Authorised share capital 500 000
tsued share capt 500 000
ADDITIONAL INFORMATION:
‘The Class A shares wore iseued at R12.50 per share a incorporation of the compary,
‘The Class B shares wore issued at R15.00 per share on 1 June 2010,
‘The directors did not pay out any dividends dung the year ended $1 December 2016
(On 1 November 2015, the 8 directors ofthe company were issued 22 600 Class A shares
‘each ata cost of R13.50 a share,
(On 30 June 2016 one of the directors decided to resign and move o a competitor. Due to
‘a cause inhi contract with Nymera ta, he had 0 eal alof the Class A shares that he
hald in Nymeria Lis, back to Nymeria Li at an agreed price of R13.00 per share
Upon resignation, he held 90 000 shares.
Roaited earings amounte to Ré £48 000 at 1 January 20%6.
Profit forthe year ended 31 December 2016 was R2 670 000 (2018: R2 484 000}.
Preferance dividends of Rt 800 000 were pad out in fll on 31 December 2018.
(On 1S March 2017 the company declared a Class A dvidend of RO.80 per share.
none
REQUIRED:
44. Present and disclose the Earnings per Sharo (EPS) of Nymora Li forthe year ended
‘31 December 2016 n terms of JAS 33 Earnings per share. (5)
Please note:
+ Comparative figures are required.
* Show calculations clearly as marks ar awarded for them,
1.2. Present the Statement of Changes in Equity of Nymeria Lid for the year ended
31 December 2016 n accordance with IAS 1 Preeontation of Financial Statements. (10)
Please note
+ Comparative figures are not requred forthe Statement of Changes in Equly.
‘Show calculations clearly a8 marks are awarded for them, =
or‘MopULE: ACCOUNTING 200
2
‘QUESTION 2 (95 MARKS)
ZAWALA (PTY) LTD
Summarised statement of financial position as at 31 December 2016
2018 2015
R z
ASSETS
Propery, plant and equipment 2.430 850
Cost 3.880 Toto
‘ezumulated depreciation (1460) 060)
Firancilinstzuments 2s79 3316
Invent 41500 41950
Tredbreceivabes 2100 1200
Bank 738 635
TOTAL ASSETS oar 795
EquiTy
(Csss A share capital 2-409 1250
Maric market reserve 138 575
Retared earings 3380 1380
LIABILITIES:
40% debentures 1879 1996
‘Trade payables 580 390
‘Taxation payable 400 41000
‘TOTAL EQUITY AND LIABILITIES 9387 795%
ADDITIONAL INFORMATION:
1, The following amounts wore Inchided In the statement of profit and loss and other
comprehensive income forthe year ended 81 December 2016:
R
Sales 30 465
Cost of elas (28.000)
Interest Income 200
Civeond income 260
Pro on disposal of plant and equipment 40
Daprociation (450)
Interest expense (223)
Taation (00)
Garon fer value adlustments (OCH) 483.
2. Advidend of R1 000 was declared and paid during the year ended 31 Docernber 2016.
3. Accounts receivable included R00 inlorest receivable at 31 December 2015. (NI at
‘51 December 2016).
4. The fwe-yoar, 103%, R2 000 debentures wore Issued on 31 Decomiber 2015, with interest
payable annually in arars on 31 December. The effective inforst rats 12%
5, Plant and equipment acquired during the year ended 31 December 2016 cast R260. RAED of
ths emount was to replace equipment while the belance was to expend operations. The
opreciation on the plant and equipment for the year was correctly calculated and accounted
‘or&
QUESTION? (CONTINUED)
6. On 1 August 2016, Zawala (Pty) Lid sole one of ts equity investments for Rt 229. The
investment had a carying amount of Rt 085 at 31 Decemioer 2015 and tad criginaly cost
2000, This investment was held 28 pat of the company's eqully Investments with adjustments
recognised in ather comprehensive Income (OCI). It isthe company poley f transfer any fair
Yelue gains and losses to rolained earrings as investments are sold. There were no
‘equistions of equly investments during the curentreportng period,
REQUIRED:
Presant.a statement of eash flows, using the drsct method, forthe year ended 31 December 2016,
in accordance Wil IAS 7 Statement of Cash flows for Zawala (Pi) Lid. Management slaced to
‘shaw dividend cash flows as cash flows fom operating acivites. (25)MODULE: ACCOUNTING 200
‘QUESTION 3 (40 MARKS)
“The following extract from the francal statements of P Lid and S Lid are presented to you for the
reportng period ended 30 June 2017:
| EXTRACTS FROM STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME |
FOR THE YEAR ENDED 30 JUNE 2017
(te :
Revenue 730 | — ae 00
Sree aes Geno, | Gave
ont seo en0 "Soro
Che fone ed
her estes gins) | sooo,
Probert Sano —"Sso ano
ee ones ezcon | (eo
Par FOR HE YEAR Seteo fiero
Ste orpaete income
TOTAL COMPREHENSIVE INCOME FOR THE YEAR 216.000 —| 748 000
[EXTRACTS FROW STATEMENTS OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2017 |
Retained earnings
Plus SL
R R
Balance att July 2016 508 000 ‘340,000
Changes in equity for 2017
Total comprehensive income forthe year 216.000 144000
Dividend {24 00) (14 000)
Balance at 30 June 2017 700 000 470 000
EXTRACTS FROM STATEMENTS OF FINANCIAL POSITION AT 30 JUNE 2017
Pie St
R R
‘ASSETS
Land 600.000 | 400000
Equipment 235.000 | 365000
Investment in S Lid 700 000 :
“Trade receivables 109000 | 160000
Inventories 245000 | 275000
Bank 60.000 |
Total assets 000 000 | 4200 000
EQUITY AND LIABILITIES.
‘Share capital (P Lid:100 O00VS (14:60 000 shares) 900000 | 500 000
Retalnad earings |__700 000 _| 470 000,
700 009 —|~970 000.
‘Trade and other payables '300 000} ~180 000
Bank oversea - 0,000
Total equity and labios 2000 000 | 1200 000nseo.os2017
QUESTION 3 (CONTINUED)
ADDITIONAL INFORMATION:
(1 1 ly 2076 P Lid obtained a contig intrest in $ Ld by buyrg 75% ofthe shares of S Ld
[A thet date the equiy of § Lid consisted ofthe folowing:
R
Share capital 500 ¢00
Retained earnings 260 (00
“The excess that P Ld paid forthe investment in S Lid was party ctibuted to land ownod by S Ltd. The
fair valu ofthe land was R100 000 higher than the carrying anount presented in the statement of
financisl poston of 5 Lid at the acquision date. The fai value of the non-controling interests at the
‘acquisiton date was determined to be R240 000.
‘At 1 July 2015 P Lid sold equipment with a carrying amount of R200 000 to Lid for R27S 000.
Equipments Gepreciated on the steighi-line method, The remabing usefu if of the equipment was.
regarded 28 6 years at that date, S Lid corinued fo use the equpment as part of property, plant and
‘equipment in their operations
'S Ltd has been seling inventories lo P Lid sine the acguslon date. During the current reporting period
fendes 30 June 2017 foal ntragroup sales amounted to R160 000. The folowing Inventories thal wore
‘purchased from § Ltd were inclided n ivortores inthe statomentof franca postion of P Li
R
Ozening inventories s0c00
Giosing inventories 0000
{SLtd maintained a 50% markup on coston all alas to Pic.
‘The flowing secountng polices apply
+ > Lid recognised the equty investment in Lid at costinits separate financial records
+ Pid elected to measure any non-contling interests in the acquire far value
+ A aouiston the identifiable assots acquired and labilies assumed were valued at thelr
‘oquietion date far values, as determined In terme of IFRS 3Business combinations.Asse052047
QUESTION 3 (CONTINUED)
REQUIRED:
3.1 Calculate the prchage dtferance atthe acquisition date. @
‘32 Prepare al the proforma journals relating to revaluatons at acquison and intragroup transactions
aa
ofthe PLid group forthe reporting period ended 30 June 2017.
+ Indicate cleaty where in the financial statements the account is presented i. statement of
‘nancial postion (SFPI: profit o loss (PL) cher comprehensive income (OG) or statement of
‘changes In equity (SCE)
+ Indicate which entity is affacted bythe journal ents
+ Journal narrations are not required.
+ Ignore al tax implications.
parent (P) and eubsidiay (S)
(13)
Prepare the consolidatd financial staterenis ofthe P Ltd group forthe year ended 30 June 2017
+The conscldated statement of cash lows isnot required.
+ Comparative figures are aiso not required oe
@‘COURSE: ACCOUNTANCY 200
sssoouzoer
QUESTION « (60 MARKS)
Mandi Properties Lid (horeafter MP} is a property development company focused on affordable
housing development. In partnership with Nedbank, they are fwolved in a project to develop simiir-
looking residentel unis In Riverview, north of Steyn City. The fellowing Information provised to you
regarding the curent reporting period ended $1 Osoember 2016:
Inventories
MP correctly cless‘ies and accounts forthe residential units as Inventory. MP uses the frstn-rst.out
{FIFO} method to measure the cost of inventory on a periodic bass. It also classes its inventory
Between raw materials, work-in-progress and finshed goods snd at 1 January 2016, there wore no
‘opaning balances for raw matarias, work-in-progress or fished goods.
(On § Jenuary 2016, MP purchased RAS milion of raw materials tobe used in the construction ofthe total
150 residential units in Riverview. Inthe current reporting period, constructon started on 135 othe units,
LMP ircutted the flowing ooets direct related fo the construction of the esidental units during the
current reporting period:
Site preparaton costs 1500 000
Architects fees R200 000
Lanour costs R6 500 000
LMP als incurred the following costs not directly related tothe construction of the residential unt during
the curent repotrg period
Administrative expences R75 000
Finance costs R4 500 000
(Other expenses R15 500
IMP uses equipment sith 2 cost price of RS 400 000 In the constructon process. The equipment was
criginaly purchases on 1 July 2014 and had an estimated Useful Ife of 8 years, At 31 December 2016,
‘the drectorsre-estmated the remaining useful le as 3 years.
‘At 31 December 2016, 60 unis were sil under constuction while 50 completed units were sold at cost
le 59%.
‘The folowing transactions have not yet been recorded and wore not included in tte abovementioned
experses:
Investments
MP eared R450 C00 dividend income on an investment in shares. MP classifies the investment as @
finaneal asset at fair value through other comprehensive income (OC!) . The jain on fair value
‘agustwent (excluding tne dividend income received) amounted to R350 000.
LMP also invested in an 8% bond, wih a face value of R80 000, hol! at amorised cost. The balance of
the bord at 1 January 2016 was R80 000. Objective evidence existed at the reporting date that
indicated that this bond Is impaired with R2 000, The balance of this bond, ater takg into account the
Impairment loss recogrised at 31 December 2016, is R78 800,‘COURSE: ACCOUNTANCY 200,
‘QUESTION 4 (CONTINUED)
Contract containing a lease
IMP entered into a contract to obtain the rghto-use ofa large printer from Designjet (Py) Ltd for user
the administrative offces. The printer has a useful life of § years and ownership wil not be obtained at
the ene ofthe contract term. Professional atorey fees of 7 600 were incur to set up the contract.
IMP identified that this contract i a lease according to IFRS 16 Leases. The following amortisation table
is provided to you
Coniract pmt —| Capital Interest Balance
soi01
Hee 2074 4400 7548 wast 31 852
‘31 Dec 2015 "14400. ‘Bare 5528 22680
'34Dec 2016 114400. 10428 3.74 12254] +
34 Dec 2017 14400 T2254 218 =
Event
During the debtor circulation done by the auditors during February 2017 the foling information came
twlight
Suffolk Development (Ply) Lid (SD), @ company who purchased many ints in MP's previous
development mado a series of bed investment decisions. it coors ineviable that the debtor wal be
liquideted and unbkely that any payment wil be received from SD. SD owed the company R1 525 000 at
the end of December 2016, No provision has as yel been made regarding this event.
(ther information
Incoms tax forthe reporting period ended is correctly calculated as Rt 218 000,
REQUIRE!
4.1 Disclose the ventory te to the statement of financial postion of Mandl Properties Ltd at
31 December 2016 based on the information provided. Your answer must Include the
necessary calculations.
‘+ Comparative information Ie not required (16)
4.2 ldentiy the Suffolk Development (Pry) Ld case correctly In terms of IAS 10 Events ater the
eporting period.
+ Discuss the accounting treatment and disclosure inthe financial statements of Man
Properties Li and
‘+ Supply the relevant journal
December 2016,
nities (i applicable) for the reporting >eried ended 31 (6)
43. Present the statement of profi end loss and other comprehensive income (by funetion) of,
Handi Properties L1d forte reporting period ended 31 December 2016.
‘+ Comparative amounts are not required. (20)
4.4. Disclose the change in accounting estimate note to the statement of profi and los and other
comprehensive income of Mnanci Propartios LIC for the reporing Fariod ended 31
December 2016 Cy
Please note
‘= Round amounts to the nearest Rang,
* Show al calculations clearly as marks are awarded for these.