22 2022

MODULE NAME: MODULE CODE:

ACCOUNTING 2A ACBP6211
ACCOUNTING 2A ACBP6221

ASSESSMENT TYPE: TEST (PAPER ONLY)

TOTAL MARK ALLOCATION: 60 MARKS
TOTAL HOURS: 1 HOUR (+5 minutes reading time)
INSTRUCTIONS:
1. Please adhere to all instructions in the assessment booklet.
2. Independent work is required.
3. Five minutes per hour of the assessment to a maximum of 15 minutes is dedicated to
reading time before the start of the assessment. You may make notes on your question
paper, but not in your answer sheet. Calculators may not be used during reading time.
4. You may not leave the assessment venue during reading time, or during the first hour or
during the last 15 minutes of the assessment.
5. Ensure that your name is on all pieces of paper or books that you will be submitting. Submit
all the pages of this assessment’s question paper as well as your answer script.
6. Answer all the questions on the answer sheets or in answer booklets provided. The phrase
‘END OF PAPER’ will appear after the final set question of this assessment.
7. Remember to work at a steady pace so that you are able to complete the assessment within
the allocated time. Use the mark allocation as a guideline as to how much time to spend on
each section.
Additional instructions:
1. This is a CLOSED BOOK assessment.
2. Calculators are allowed.
3. Answer All Questions.
4. Show all calculations, where applicable (marks may be awarded for this).

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Question 1 (Marks: 35)

WorthTheSqueeze (WTS) (Pty) Ltd is a cold pressed juice company based in Durban. WTS prides
themselves on sourcing the freshest organic ingredients for their juices as well as packaging and
bottling them sustainably.

The details of WTS assets are as follows:

Fruit Filtration Machine

Machine Name Purchase Date Cost
Appealer X875 01-Jan-21 2 800 000

The entity follows the component approach in the depreciation of its filtration machines. The
filtering unit is depreciated in accordance with the amount of 250ml juice bottles produced and
the rest of the machine is depreciated on a straight-line basis.

Management estimates that the filtration machines have an eight-year useful life with no residual
value.

The filtering unit is 40% of the total cost and it is estimated that the machine will be able to filter
4 000 250ml juice bottles over its useful life. The following information is available in respect of
juice production (250ml bottles):

250ml Bottles
Financial year 2021 1 200
Financial year 2022 900

Wicketer Machine
WTS has elected to diversify its operations by producing sustainable plastic bags. On 1 April 2020,
a wicketer machine was purchased to create these plastic bags and was immediately brought into
use.

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The cost of the wicketer machine is as follows:

Purchase Price R70 000

Installation R15 000
Staff Training R6 500

The machine has a useful life of 10 years and management’s policy is to revalue the machine
every two years from the date of purchase. The entity adopts the elimination method for
revaluations. The machine is depreciated on a straight-line basis.

An independent valuator who is a competent industry expert has determined the fair value of the
machine to be R90 000 on the 2nd anniversary of the purchase of the machine.

The Financial Director has also approved a policy that the revaluation surplus may be transferred
to retained earnings as the asset is used.

Required:

Q.1.1 Calculate the carrying value of the Fruit Filtration Machine at 30 June 2022. (15)

Q.1.2 Show all current year journal entries in respect of the Wicketer Machine up until (20)
the year ended 30 June 2022.
Journal Narrations are required.
Round all figures to the nearest Rand.

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Question 2 (Marks: 20)

Coconut Limited produces vegan snacks for distribution to various retailers across the country.

The following is the trial balance of Coconut Limited for the year ended 28 February 2022:

Account Name Debit Credit

Inventory 14 000
Trade receivables 22 000
Revenue 757 500
Cost of sales 550 000
Property, plant and equipment (Carrying value) 42 000
Telephone expense 7 500
Revaluation reserve 2 000
Salaries and wages 250 000
Trade payables 85 000
Retained earnings - 1 March 2021 16 000
Share capital 50 000
Advertising expenses 20 000
Depreciation 65 000
Loan 55 000
Bank 5 000
Finance income 10 000

Additional Information:

• The outstanding loan is payable over the next three years in the following ratio 30: 20: 50.
• Inventory with a cost price of R10 000 (Selling price of R15 000) was returned by a debtor.
This entry has not yet been accounted for.
• 10 000 shares were issued on 28 February 2022 at R2 each for cash. This entry has not yet
been accounted for.
• The revaluation reserve is due to land being revalued two years ago.

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Required:
Q.2.1 Prepare the Statement of Financial Position of Coconut Limited for the (20)
financial year ended 28 February 2022.
Comparative figures are not required.

Question 3 (Marks: 5)
You have recently been appointed as an IFRS Consultant at Accrualworld Inc. The following two
questions have been posed to you by clients for which your manager requires answers:

1. What is the difference between an expense and a liability? It seems that they both relate to
money I must pay?
2. Who sets the accounting standards that I must follow and do I have to watch the Finance
Minister’s budget speech to determine which accounting standards to adopt?

Required:

Provide answers to the above questions posed to you by your client.

Marks will be awarded as indicated below:

Question 1 (3)
Question 2 (2)

END OF PAPER

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