AUE3761 Assignment 3_2021
AUE3761 ASSIGNMENT 03
Instructions:
(1) Consult Study @ Unisa for instructions on how to submit written or typed assignments as
well as section 8 in tutorial letter 101.
Special instruction regarding the answering of this assignment
(1) This assignment covers the content of the topics presented in tutorial letters 102-104.
(2) All the questions should be answered.
(3) Only selected questions will be marked.
Plagiarism and cheating:
m
Please refer to Unisa’s policy on plagiarism and policy on academic integrity as well as section
er as
8 in tutorial letter 101. You are reminded that your assignment must be your own work.
co
eH w
By submitting your assignment, you confirm that you accept and will adhere to the terms of
the plagiarism and cheating declaration. Please note:
o.
o
rs e
If you are found to be in violation of the declaration, you will receive 0% for this assignment
ou urc
and may be subject to disciplinary proceedings.
o If you copied all or a portion of your assignment from someone else (including tutors,
o
online study group, etc.), both you and the person(s) you copied from will receive 0%. If
aC s
any similar-looking/-worded assignments are found, it will be considered to be a violation
vi y re
of the declaration.
This declaration holds you accountable for completing your assignment on your own.
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PLAGIARISM AND CHEATING DECLARATION:
ar stu
By submitting AUE3761 Assignment 03, I declare that
I have read the Unisa Students’ Disciplinary Code
is
I know what plagiarism and cheating is, that plagiarism and cheating is wrong and that
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disciplinary steps can be taken against me if I am found guilty of plagiarism
this assignment, submitted by myself, is my own work and that I have referenced all
the sources that I have used
sh
I have not allowed any other student to copy my work
I know that if I am found to be in violation of this declaration I will receive 0% for the
assignment involved and may be subject to disciplinary proceedings.
Please note: You do not have to submit the declaration. By submitting any AUE3761
assignment, you automatically declare that you adhere to all the above with regard to the
specific assignment.
1
This study source was downloaded by 100000828919085 from CourseHero.com on 08-20-2021 02:46:53 GMT -05:00
https://www.coursehero.com/file/102189343/2021-AUE3761-ASSIGNMENT-03-Due-23-August-2021-Finalpdf/
, AUE3761 Assignment 3_2021
ASSIGNMENT 03: WRITTEN ASSIGNMENT
UNIQUE ASSIGNMENT NUMBER FOR THE FIRST SEMESTER:
799318
DATE OF SUBMISSION:
23 August 2021
QUESTION 100 marks
The following information relates to the audit of Living Well (Pty) Ltd (Living Well):
BACKGROUND INFORMATION
You are a third-year trainee accountant employed at a medium-size audit firm namely ISA
Incorporated. Most of the audit firm’s audit clients operate in the retail sector and none of them
m
are listed companies.
er as
co
Living Well is in the business of selling natural and organic health products from a warehouse in
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Tshwane. The company has been in business for the past decade and has been consistently
o.
profitable over the past financial years. Living Well’s turnover for the 2021 financial year is
rs e
reported as R5 million (budgeted for 2021: R4.9 million; reported for 2020: R4.5 million). The
ou urc
gains in the current financial year are attributed to South Africans wanting to be healthier during
the coronavirus pandemic and therefore buying organic health products. The company is not
capital intensive and does not own the warehouse from where they operate. The company
o
sources its products from both local and international wholesalers and therefore also has to
aC s
comply with various local and international laws and regulations. To make sure that all laws and
vi y re
regulations are adhered to, Living Well has an exceptional team of legal advisors who advises
them on all legal requirements and changes thereto on a regular basis.
In order to deliver products to some of Living Well’s major customers, the company owns a fleet
ed d
of mini trucks of which most of them are between two and three years old. Some mini trucks were
ar stu
purchased in the current financial year. The account balance of mini trucks as part of the property,
plant and equipment account balance is included as R3 million in the statement of financial
position for the 2021 financial year (budgeted for 2021: R3.1 million; reported for 2020: R3.8
million). The mini trucks are carried on the financial statements, at cost, less accumulated
is
depreciation and impairment losses. Depreciation on mini trucks is charged on a straight-line
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basis over their estimated useful lives which is indicated as five years according to Living Well’s
accounting policy. During the 2021 financial year, it became very popular for customers to request
that products are delivered to them and therefore, Living Well decided to include delivery of
products to the customer’s premises as part of their customer service. Due to this decision, the
sh
frequency of trips that the fleet of mini trucks made to deliver products to customers, increased
substantially, which caused mini trucks to break down more often due to overuse. As these trucks
might have to be replaced or undergo major maintenance in the next financial year, there is
uncertainty whether the depreciation and impairment losses have been calculated correctly.
As part of a Broad-Based Black Economic Empowerment (BBBEE deal), Living Well is planning
to expand considerably in the 2022 financial year. The deal will involve a listed company which
requires Living Well to be audited externally for the first time for the 28 February 2021 year-end.
As Living Well had a public interest score of less than 100, the company was independently
2
This study source was downloaded by 100000828919085 from CourseHero.com on 08-20-2021 02:46:53 GMT -05:00
https://www.coursehero.com/file/102189343/2021-AUE3761-ASSIGNMENT-03-Due-23-August-2021-Finalpdf/
AUE3761 ASSIGNMENT 03
Instructions:
(1) Consult Study @ Unisa for instructions on how to submit written or typed assignments as
well as section 8 in tutorial letter 101.
Special instruction regarding the answering of this assignment
(1) This assignment covers the content of the topics presented in tutorial letters 102-104.
(2) All the questions should be answered.
(3) Only selected questions will be marked.
Plagiarism and cheating:
m
Please refer to Unisa’s policy on plagiarism and policy on academic integrity as well as section
er as
8 in tutorial letter 101. You are reminded that your assignment must be your own work.
co
eH w
By submitting your assignment, you confirm that you accept and will adhere to the terms of
the plagiarism and cheating declaration. Please note:
o.
o
rs e
If you are found to be in violation of the declaration, you will receive 0% for this assignment
ou urc
and may be subject to disciplinary proceedings.
o If you copied all or a portion of your assignment from someone else (including tutors,
o
online study group, etc.), both you and the person(s) you copied from will receive 0%. If
aC s
any similar-looking/-worded assignments are found, it will be considered to be a violation
vi y re
of the declaration.
This declaration holds you accountable for completing your assignment on your own.
ed d
PLAGIARISM AND CHEATING DECLARATION:
ar stu
By submitting AUE3761 Assignment 03, I declare that
I have read the Unisa Students’ Disciplinary Code
is
I know what plagiarism and cheating is, that plagiarism and cheating is wrong and that
Th
disciplinary steps can be taken against me if I am found guilty of plagiarism
this assignment, submitted by myself, is my own work and that I have referenced all
the sources that I have used
sh
I have not allowed any other student to copy my work
I know that if I am found to be in violation of this declaration I will receive 0% for the
assignment involved and may be subject to disciplinary proceedings.
Please note: You do not have to submit the declaration. By submitting any AUE3761
assignment, you automatically declare that you adhere to all the above with regard to the
specific assignment.
1
This study source was downloaded by 100000828919085 from CourseHero.com on 08-20-2021 02:46:53 GMT -05:00
https://www.coursehero.com/file/102189343/2021-AUE3761-ASSIGNMENT-03-Due-23-August-2021-Finalpdf/
, AUE3761 Assignment 3_2021
ASSIGNMENT 03: WRITTEN ASSIGNMENT
UNIQUE ASSIGNMENT NUMBER FOR THE FIRST SEMESTER:
799318
DATE OF SUBMISSION:
23 August 2021
QUESTION 100 marks
The following information relates to the audit of Living Well (Pty) Ltd (Living Well):
BACKGROUND INFORMATION
You are a third-year trainee accountant employed at a medium-size audit firm namely ISA
Incorporated. Most of the audit firm’s audit clients operate in the retail sector and none of them
m
are listed companies.
er as
co
Living Well is in the business of selling natural and organic health products from a warehouse in
eH w
Tshwane. The company has been in business for the past decade and has been consistently
o.
profitable over the past financial years. Living Well’s turnover for the 2021 financial year is
rs e
reported as R5 million (budgeted for 2021: R4.9 million; reported for 2020: R4.5 million). The
ou urc
gains in the current financial year are attributed to South Africans wanting to be healthier during
the coronavirus pandemic and therefore buying organic health products. The company is not
capital intensive and does not own the warehouse from where they operate. The company
o
sources its products from both local and international wholesalers and therefore also has to
aC s
comply with various local and international laws and regulations. To make sure that all laws and
vi y re
regulations are adhered to, Living Well has an exceptional team of legal advisors who advises
them on all legal requirements and changes thereto on a regular basis.
In order to deliver products to some of Living Well’s major customers, the company owns a fleet
ed d
of mini trucks of which most of them are between two and three years old. Some mini trucks were
ar stu
purchased in the current financial year. The account balance of mini trucks as part of the property,
plant and equipment account balance is included as R3 million in the statement of financial
position for the 2021 financial year (budgeted for 2021: R3.1 million; reported for 2020: R3.8
million). The mini trucks are carried on the financial statements, at cost, less accumulated
is
depreciation and impairment losses. Depreciation on mini trucks is charged on a straight-line
Th
basis over their estimated useful lives which is indicated as five years according to Living Well’s
accounting policy. During the 2021 financial year, it became very popular for customers to request
that products are delivered to them and therefore, Living Well decided to include delivery of
products to the customer’s premises as part of their customer service. Due to this decision, the
sh
frequency of trips that the fleet of mini trucks made to deliver products to customers, increased
substantially, which caused mini trucks to break down more often due to overuse. As these trucks
might have to be replaced or undergo major maintenance in the next financial year, there is
uncertainty whether the depreciation and impairment losses have been calculated correctly.
As part of a Broad-Based Black Economic Empowerment (BBBEE deal), Living Well is planning
to expand considerably in the 2022 financial year. The deal will involve a listed company which
requires Living Well to be audited externally for the first time for the 28 February 2021 year-end.
As Living Well had a public interest score of less than 100, the company was independently
2
This study source was downloaded by 100000828919085 from CourseHero.com on 08-20-2021 02:46:53 GMT -05:00
https://www.coursehero.com/file/102189343/2021-AUE3761-ASSIGNMENT-03-Due-23-August-2021-Finalpdf/
