FAC2601 EXAM PACK

S - The study-notes marketplace FAC2601 EXAM PACK UNIVERSITY EXAMINATIONS January/February 2021 FAC2601 FINANCIAL ACCOUNTING FOR COMPANIES 100 Marks Duration 2 Hours This paper consists of 8 pages. Instructions: Download this paper as soon as it has been accessed. Remember to complete and adhere to the Honesty Declaration. Please upload submission in PDF-format, single file not larger than 20Mb before the expiry of the due time. THIS PAPER CONSISTS OF EIGHT (8) PAGES PLEASE NOTE: 1. This paper consists of THREE (3) questions. 2. All questions must be answered. 3. Basic calculations, where applicable, must be shown. 4. Ensure that you are handed the correct examination answer book (blue for accounting) by the invigilator (only applicable for venue based exams). 5. Each question attempted must be commenced on a new (separate) page. 6. PROPOSED TIMETABLE: (Avoid deviating from this as far as possible.) Question No Subject Marks Time in minutes 1 Multiple choice questions 10 12 2 Statement of Financial Position and Statement of Profit or Loss and other Comprehensive Income with relevant notes 50 60 3 Profit calculation and Statement of Changes in Equity 40 48 TOTAL 100 120 QUESTION 1 (10 marks) (12 minutes) This question must be answered in your examination answer book – please only write down the number that you think is correct. Each question has only one correct answer. The marks per question are indicated in brackets at the end of each question. (a) The following list of balances appear, amongst others, in the accounting records of Vusi Ltd on 31 October 2020: Ordinary share capital (shares issued at R2.30 each) R1 265 000 Proceeds of ordinary shares issued on 30 June 2020 (Shares issued at R2.70 each) R 540 000 The following decision was taken and has not yet been recorded in the accounting records of Vusi Ltd as at 31 October 2020: The directors decided on a capitalisation share issue of 1 share for every 5 shares held as at 31 October 2020 at R1,20 per share. Which one of the following options represents the amount of the shares that have to be capitalised?: 1. R48 000 2. R132 000 3. R180 000 4. R1 985 000 (2) (b) Shaka Ltd purchased inventory for R644 000 (including VAT @ 15%) from a supplier. The supplier grants a 6,5% settlement discount for settlement within 30 days. Shaka Ltd arranged with a transport company to deliver the inventory to its premises. The delivery company charged Shaka Ltd R23 000 (including VAT @ 15%) for this delivery. A goods-in-transit insurance was taken out by Shaka Ltd with its insurance brokers to cover any damage of the inventory while in transit. The premium of this goods-in-transit amounted to R1 500 (excluding VAT). Shaka Ltd has a policy of claiming all discounts available to it. What is the purchasing cost of the inventory?: 1. R543 600 2. R545 100 3. R616 904 4. R618 404 (2) (c) Clever Brokers Ltd underwrites an issue of 25 000 ordinary shares at R2.50 each in Smart Ltd. The underwriting commission is 8%. If the public takes up 20 000 shares, how much is the commission?: 1. R1 600 2. R2 000 3. R4 000 4. R5 000 (2) QUESTION 1 (continued) (d) Khoza Ltd issued 20 000 8% cumulative preference shares at R3 each. During the 2019 financial year, Khoza Ltd did not have sufficient funds to pay for the preference shares dividends. During the following year, 2020, Khoza Ltd decided to declare and pay dividends for both 2019 and 2020. How much will be accounted for as dividends declared and paid in the 2020 statement of changes in equity?: 1. R1 600 2. R3 200 3. R4 800 4. R9 600 (2) (e) Which one of the following costs are specifically excluded in the purchasing cost of inventory?: 1. Transport costs 2. Import duties and other appropriate taxes 3. Selling expenses 4. Handling costs (2)   (50 marks) (60 minutes) Koopman Ltd extracted the following balances from its financial records on 31 December 2020: R Revenue ........................................................................................................................ 9 504 500 Other income ................................................................................................................. 100 000 Administrative expenses ............................................................................................... 1 103 000 Distribution expenses ..................................................................................................... 347 000 Other expenses ............................................................................................................. 504 000 Income tax expense ....................................................................................................... 164 338 Land at cost ................................................................................................................... 1 000 000 Building at cost .............................................................................................................. 3 800 000 Furniture and fittings at cost (1 January 2020) ............................................................... 880 000 Motor vehicles at carrying amount (1 January 2020) ...................................................... 300 000 Machinery at carrying amount (1 January 2020) ............................................................ 748 000 Accumulated depreciation: - Motor vehicles (1 January 2020) ............................................................................... 200 000 - Machinery (1 January 2020) ..................................................................................... 358 000 Bank overdraft .............................................................................................................. 247 525 Inventory at cost ............................................................................................................ 668 050 Investment at cost .......................................................................................................... 90 000 Trade and other receivables ......................................................................................... 232 496 Ordinary share capital .................................................................................................... 1 800 000 8% Non-cumulative preference shares .......................................................................... 1 500 000 7% Cumulative preference shares ................................................................................. 2 000 000 Dividends payable.......................................................................................................... 100 000 Accumulated loss ........................................................................................................... 827 049 Additional information: The following transactions have not yet been recorded in the accounting records of Koopman Ltd for the year ended 31 December 2020: 1. Koopman Ltd maintained an annual gross profit of 35% on turnover during 2020. 2. On 1 March 2020, Koopman Ltd leased a machine from Sammy Ltd for a period of 3 years. The lease payments were agreed to be paid at an amount of R1 700 per month for the first 24 months and R2 000 per month for the last 12 months of the lease. These payments will be paid at the end of each month. The lease payments already made were recorded under other expenses. 10% of every lease payment goes toward covering the maintenance costs that will be paid for by Sammy Ltd. These values are in line with costs for similar maintenance services rendered by third parties. The contract is a lease in terms of IFRS 16. Koopman Ltd elected to apply the recognition exemption in respect of low value assets to this lease agreement. Koopman Ltd accounts for the lease and non-leased components separately. 3. Administrative expenses consist of the following: R Auditor’s remuneration – for audit fees .................................................................. 20 500 Auditor’s remuneration – travelling expenses ......................................................... 4 000 Salaries and wages ............................................................................................... 1 074 000 Bank charges ......................................................................................................... 4 500 (continued) 4. Land and Building consist of Plot 16, Atteridgeville AH, Pretoria, with improvements thereon. The improvements are used as the administrative offices of the company and were purchased on 1 January 2010. Buildings are depreciated over 20 years according to the straight-line method. The building has a residual value of R1 000 000. On 1 January 2020, Mr Paarwater, a sworn appraiser, revalued the land, a non-depreciable asset, at R1 500 000. 5. The depreciation rates for motor vehicles and furniture and fittings are based on the straight-line method, as follows: Motor vehicles – 20% per annum Furniture and fittings – 25% per annum Machinery is depreciated at 25% on the diminishing balance method. All furniture and fittings were purchased on 1 April 2019. Additional furniture was purchased on 30 March 2020 at a cost of R345 000. All motor vehicles were purchased on 1 January 2018. On 1 March 2020, the company disposed of one of its vehicles with a cost of R100 000 at a selling price of R69 833. 6. The cost price of the inventory on hand on 31 December 2020 consisted of finished goods of R325 050, work in progress of R203 000 and raw materials of R140 000. The net realisable value of finished goods was determined to be 10% below the cost of finished goods. The net realisable value of raw material and work in progress was estimated to be the same as cost. Inventory is recorded at the lower of cost and net realisable value. 7. Investments consist of 8 400 ordinary shares in Chetty Ltd. These shares were purchased on 1 June 2020 for R90 000, including transaction costs of R1 000. These shares were purchased for speculation purposes and were classified as financial assets at fair value through profit or loss. The issued share capital of Chetty Ltd consists of 50 000 ordinary shares. On 31 December 2020, the shares were trading on the JSE at R4.50 each. 8. A loan from Riksha Ltd for an amount of R400 000, was secured on 1 April 2020. The loan plus interest is repayable annually in arrears over a period of 3 years, with the first instalment being due on 1 April 2021. The capital portion of the first instalment was calculated to be R118 540. Interest is calculated at 12% per annum. This transaction has not been recorded in the accounting records of Koopman Ltd in the current year. (continued) REQUIRED: Marks Prepare the following components of the annual financial statements of Koopman Ltd: (a) The statement of financial position for the year ended 31 December 2020. (b) The statement of profit or loss and other comprehensive income for the year ended 31 December 2020. (c) The note on leases. Please note: Ignore comparative figures and all the notes to the financial statements, except for the one specifically required in part (c). All calculations must be shown. Your answer should comply with the requirements of International Financial Reporting Standards (IFRS). 25 20 5 [50] QUESTION 3 (40 marks) (48 minutes) The following is an extract from the trial balance of Champion Ltd on 28 February 2019: Debit/(Credit) R 15% Long-term loan (refer 2) (2 700 000) Investments (refer 3) 960 000 Sales () Cost of sales 8 000 000 Administrative expenses 2 400 000 Distribution expenses 240 000 Other operating expenses 160 000 Other income (300 000) Income tax expense 2 471 700 Retained earnings (1 March 2018) (2 400 000) Mark-to-market reserve (1 March 2018) (120 000) Additional information: 1. Office building Champion Ltd owns an office building in Sandton, which was acquired on 1 March 2015, at a cost of R5 500 000 (Land: R1 500 000; Building: R4 000 000). The property was available for use, as intended by management, on acquisition date. The useful life of the building was estimated to be 20 years and a residual value of Rnil was allocated to the building upon initial recognition. Both the useful life and residual value of the building remained unchanged. Champion Ltd adopted a policy to revalue its owner-occupied land. Revaluations are made with sufficient regularity to ensure that the carrying amount does not differ materially from the fair value at year-end. On 1 March 2018, Mr J Naidoo, an independent sworn appraiser revalued the property for the first time and determined the fair value of the land to be R1 700 000. The inexperienced accountant of Champion Ltd did not account for the revaluation for the current year. 2. Long-term loan Champion Ltd entered into an unsecured long-term loan agreement on 31 August 2017. The loan is repayable in six equal annual instalments commencing on 31 August 2018. The nominal interest rate is 15% per annum. Interest for the current year must still be provided for in the accounting records of Champion Ltd and it is payable on 5 March 2019. 3. Investments Included in investments at year-end on 28 February 2019 is the following investment: Champion Ltd acquired 4 500 shares in a listed company, Record Ltd. The shares are not held for trading but were acquired with a long-term view. The directors of Champion Ltd irrevocably elected at initial recognition to classify this investment as at fair value through other comprehensive income. The market value of the shares on the JSE Ltd at year-end on 28 February 2018 amounted to R360 000. The shares traded at R95,00 per share on the JSE Ltd on 28 February 2019. The increase in the market value of this investment has not been recorded yet in the accounting records of Champion Ltd for the current year. QUESTION 3 (continued) 4. Authorised and issued share capital Champion Ltd was incorporated with an authorised share capital of: 6 000 000 Ordinary shares % Cumulative preference shares % Non-cumulative preference shares The issued share capital of Champion Ltd on 1 March 2018 was as follows: R Ordinary share capital (shares issued at R2 each) 4 500 000 10% Cumulative preference shares 900 000 12% Non-cumulative preference shares 1 350 000 The following share transactions occurred during the current financial year and have not been accounted for yet in the accounting records of Champion Ltd for the current year: • Champion Ltd issued 75 000 12% Non-cumulative preference shares at R4,00 per share on 1 September 2018. • On 31 October 2018 Champion Ltd received proceeds of R1 200 000 when 600 000 ordinary shares were issued. • On 28 February 2019 capitalisation shares were issued to all the registered ordinary shareholders at R1,50 per share at the ratio of one ordinary share for every five ordinary shares held. 5. Dividends An ordinary dividend of 10c per share was declared to all registered ordinary shareholders on 28 February 2019. The company did not pay or declare any dividends during the previous financial year. REQUIRED: Marks (a) Calculate the profit for the year in the statement of profit or loss and other comprehensive income of Champion Ltd for the year ended 28 February 2019. (b) Using the information calculated in (a) above, prepare the statement of changes in equity of Champion Ltd for the financial year ended 28 February 2019, according to the requirements of International Financial Reporting Standards (IFRS). Please note: Ignore all accounting policy notes. Show all calculations. 10 30 40 © UNISA 2021 QUESTION 1 a. 2 b. 3 c. 4 d. 4 e. 3 QUESTION 2 Koopman Ltd Non Current Assests 6 701 562,00 Property plant and equipement 6 701 562,00 Current Assets 905 841,00 Total Assets 7 607 403,00 Equity and Liabilities Equity Share capital: Ordinary share capital 1 800 000,00 8% Non-cumulative preference shares 1 500 000,00 7% Cumulative preference shares 2 000 000,00 Accumulated loss - 827 049,00 Other components of equity: Revaluation reserve 500 000,00 Statement of financial position for the year ended 31 December 2020 Inventory (Lower of cost or net realisable value) (325 050 x 90%) + 203 000 + 140 000 635 545,00 Investment (Speculative purpose) (8 400 x 4,50) 37 800,00 Trade and other receivables 232 496,00 Total equity 4 972 951,00 Non-current liabilities 281 460,00 Loan from Riksha Ltd Equity and Liabilities 7 607 403,00 () 281 460,00 Current liabilities 502 065,00 Dividends payable 100 000,00 Current portion of loan 118 540,00 Bank overdraft 247 525,00 Interest on loan (12% x 400 000x9/12) 36 000,00 Calculations Property plant and equipment Furniture Land Building and fittings Motor vehicleMachinery Total Carry value at the beginig of th e year 1 000 000,00 3 800 000,00 715 000,00 300 000,00 700 000,00 6 515 000,00 1 000 000,00 3 800 000,00 880 000,00 500 000,00 1 058 000,00 7 238 000,00 - - - 165 000,00 - 200 000,00 - 358 000,00 - 723 000,00 Cost Accumulated depreciation Revaluation ( 000) 500 000,00 500 000,00 Additions 345 000,00 345 000,00 Depreciation for the year - 140 000,,00 - 43 333,,,00 Disposal - 56 667,00 Carrying value at the end of year 1 500 000,00 3 660 000,00 816 562,00 200 000,00 Motor vehicle cost at 1 January 2020 = 300 000 + 200 000 = 500 000 Machinery cost at 1 janury 2020 = 700 000 + 358 0000 = 1 058 000 525 000,00 - 56 667,,00 Furniture and fitting accumulated depreciation at 1 January 2020 = 25% x 880 000 x 9/12 = 165 000 Depreciation for the year 2020 Building = (3 800 000 – 1 000 000)/20 = 140 000 Motor vehicles = 20% x (300 000 – 100 000) + 20% x 100 000 x 2/12 = 43 333 Furniture and fittings = 25% x 715 000 + 25% x 345 000 x 9/12 = 243 438 Machinery = 25% x 700 000 = 175 000 The statement of profit or loss and other comprehensive income for the year ended 31 December 2020. Revenue 9 504 500,00 Cost of sales (9 504 500 - (35% x 9 504 500)) - 6 177 925,00 Gross profit (35% x 9 504 500) 3 326 575,00 Other income 100 000,00 3 426 575,00 Administration, selling and distriution expenses - 2 555 771,00 Administrative expenses 1 103 000,00 Distribution expenses 347 000,00 Other expenses 504 000,00 Depreication (PPE note) 601 771,00 Profit before Interest and tax 870 804,00 Interest on loan - 36 000,00 Profit before tax 834 804,00 Income tax - 164 338,00 PROFIT FOR THE YEAR 670 466,00 Other comprehensive income Gain on land revaluation 500 000,00 Loss on financial assets at fair value () - 52 200,00 TOTAL COMPREHENSIVE INCOME FOR THE YEAR 1 118 266,00 QUESTION 3 Profit for the year in the statement of profit or loss and other comprehensive income of Champion for the year ended 28 February 2019.Ltd Sales ,00 Cost of sales - 8 000 000,00 Gross profit ,00 Other income 300 000,00 ,00 - 5 642 950,00 Administrative expenses 2 400 000,00 240 000,00 Distribution expenses Other expenses 160 000,00 Interest on loan) (2 700 000x15% x6/12)+()x15% x 6/12 371 250,00 Income tax expense 2 471 700,00 Profit for the year 6 657 050,00 Other comprehensive income Revaluation 200 000,00 Gain on financial assets at fair value (95 x 4 500) - 360 000 67 500,00 TOTAL COMPREHENSIVE INCOME FOR THE YEAR 6 924 550,00 Statement of changes in equity of Champion Ltd for the financial year ended 28 February 2019, according to the requirements of International Financial Reporting Standards (IFRS) Ordinary share Retained earnings Cumulative Non-cumulative preference preference Mark-to-market shares shares reserve Revaluation Balance at 1 January 2018 4 500 000,00 2 400 000,00 900 000,00 1 350 000,00 120 000,00 Changes in accounting policy - - - - - - Restated balance 4 500 000,00 2 400 000,00 900 000,00 1 350 000,00 120 000,00 - Changes in equity for 2019 Total comprehensive income for the year 6 924 550,00 200 000,00 2 055 000,00 300 000,00 Issue of shares Ordinary shares Number of share in issue = 4 500 000/2 = 2 250 000 + 600 Number of capitalisation shares = (2 250 000 + 600 000)/5 = 570 000 Value of capitalisation shares = 570 000 x 1.50 = 885 000 Value of additional shares = 1 200 000 Total issue during the year = 1 200 000 + 8855 000 = 2 055 000 Non-cumulative preference Value = 75 000 x 4 = 300 000   UNIVERSITY EXAMINATIONS October/November 2020 FAC2601 FINANCIAL ACCOUNTING FOR COMPANIES 100 Marks Duration 2 Hours This paper consists of 6 pages. Instructions: Download this paper as soon as it has been accessed. Remember to complete and adhere to the Honesty Declaration. Please upload submission in PDF-format, single file not larger than 20Mb before the expiry of the due time. THIS PAPER CONSISTS OF SIX (6) PAGES PLEASE NOTE: 1. This paper consists of FOUR (4) questions. 2. All questions must be answered. 3. Basic calculations, where applicable, must be shown. 4. Ensure that you are handed the correct examination answer book (blue for accounting) by the invigilator. 5. Each question attempted must commence on a new (separate) page. 6. PROPOSED TIMETABLE: (Avoid deviating from this as far as possible.) Question no Subject Marks Time in minutes 1 Multiple-choice questions 10 12 2 Inventories 20 24 3 Property, plant and equipment & Investment property notes 35 42 4 Leases 35 42 TOTAL 100 120 [TURN OVER] QUESTION 1 (10 marks) (12 Answer the following multiple-choice questions. Indicate your choice by selecting only one option from the four options given for each question answered. (a) Which one of the following is not considered to be an enhancing qualitative characteristic to ensure the usefulness of information that is already relevant and faithfully represented in terms of The Conceptual Framework for Financial Reporting 2018? 1) Completeness; 2) Comparability; 3) Timeliness; 4) Understandability. (b) Which one of the following is not an objective of financial statements to provide information of an entity that is useful to a wide range of users when making economic decisions as set out by IAS 1? 1) Statement of financial position; 2) Statement of financial performance; 3) Statement of cash flows; 4) Statement of budget forecasts. (c) In accordance to IAS 2 the historical cost of inventories does not include: 1) Purchasing costs; 2) Selling expenses; 3) Conversion costs; 4) Other costs incurred in bringing inventories to their present location and condition. (d) On 1 January 2020, Duma Ltd issued a bond with a nominal value of R500 000 and a coupon rate of 8% (annually in arrears) when the market rate was also 8%. The bond will be redeemed at a 10% premium above nominal value on 31 December 2022. Transaction costs paid by Duma Ltd amounted to R30 000. The effective interest rate is: 1) 8,00%; 2) 10,99%; 3) 13,48%; 4) 10,43%. (e) Moola Ltd sold goods to a customer for a total consideration of R181 500, payable 24 months after delivery. The customer obtained control of the products on delivery. The cash selling price of the goods amounted to R150 000 and represents the amount that the customer would pay upon delivery instead of over 24 months. Moola Ltd will recognize: 1) Revenue of R181 500 on delivery; 2) Revenue of R181 500 after 24 months; 3) Revenue of R150 000 on delivery and interest income of R31 500 over 24 months; 4) Revenue of R150 000 on delivery and interest income of R31 500 after 24 months. QUESTION 2 (20 marks) (24 minutes) Bongi Ltd incurred the following transactions, relating to inventory, during the month of March 2020: Units Rand per unit 1 March 2020: Opening balance 2 March 2020: Sales 7 March 2020: Purchases 15 March 2020: Sales 25 March 2020: Purchases 30 March 2020: Sales 400 100 275 300 500 250 25 30 27 35 30 36 REQUIRED: Marks (a) Calculate the cost price of closing inventory, using the FIFO method, for both the perpetual and periodic inventories recoding systems; (b) Calculate the cost price of closing inventory, using the weighted average method, for both the perpetual and periodic inventories recording systems. 6 14 [20]   QUESTION 3 (35 marks) (42 The following balances were extracted from the trial balance of Bell Crest Ltd on 30 June 2020: Additional information R Land at cost 1, 2 800 000 Buildings at cost 1, 2 1 200 000 Plant and machinery at carrying amount (1 July 2019) Furniture and equipment at cost 2, 3, 5 4, 5 - Accumulated depreciation on furniture and equipment (1 July 2019) 4, 5 (120 000) Additional information 1. Bell Crest Ltd owns property in Germiston, situated on stand 50, that it occupies for its own business purposes. The land and buildings were acquired on 1 August 2016. The building is depreciated over 20 years. On 1 October 2019, Bell Crest Ltd decided to rent out the property to a suitable tenant. Costs of R30 000 were incurred to secure the tenant. The respective net replacement value of the land and fair value of the buildings on 1 October 2019 was R850 000 and R1 050 000. The respective net replacement value of the land and fair value of the buildings on 30 June 2020 was R900 000 and R1 100 000. All of the net replacement values and fair values were determined by Mr Blog an independent sworn appraiser. Mr Blog had recent experience in the location and category of the property being valued. The values were determined with reference to net current market prices on an arm’s length basis of similar properties in similar areas. 2. On 1 September 2019, additional land was purchased at a cost of R700 000 in Germiston on stand 55, for use for its own business purposes. From 1 August 2019 Bell Crest withdrew some of its plant and machinery costing R500 000 to be used in the construction of the building. The building was completed and ready for use on 1 November 2019. The following expenses were incurred in the construction of the building: Labour costs R850 000 Material R425 000 The newly constructed building had an estimated useful life of 25 years. Plant and machinery with a carrying amount of R1 000 000 at the beginning of the current financial year was withdrawn completely from use on 1 September 2019 after health inspectors prohibited the use of the plant due to irreparable pollution problems it may cause. 3. All plant and machinery was acquired on 1 July 2017. 4. No transactions took place for furniture and equipment during the current financial year. 5. The following rates of depreciation are applicable: - Plant and machinery at 25% per annum according to the reducing balance method - Furniture and equipment at 10% per annum on the straight-line method 6. Bell Crest Ltd is a registered VAT vendor. QUESTION 3 (continued) REQUIRED: Marks Prepare only the Property, plant and equipment and Investment property note in the financial statements of Bell Crest Ltd for the year ended 30 June 2020 in compliance with International Financial Reporting Standards (IFRS). Please note: The total column of Property, plant and equipment note is NOT required. Comparative figures are NOT required. Accounting Policy notes are NOT required. All calculations must be shown. 35 [35]   QUESTION 4 (35 marks) (42 A manufacturing company, Samcon Ltd, entered into a contract on 1 January 2019, whereby a robotics-arm with a total cash selling price and fair value of R850 000 would be leased from Fanuk Ltd. The contract is a lease in terms of IFRS 16 Leases. The robotics-arm is used in their manufacturing process to speed up their manufacturing time, producing more units per hour. The lessor did not incur any initial direct costs. Samcon Ltd paid R30 000 legal fees for negotiating the lease. For tax purposes, the legal fees incurred by Samcon Ltd are of a capital nature. The period of the lease is three years and the lease payments of R98 500 are payable quarterly in arrears. Samcon Ltd will obtain ownership of the robotics-arm at the end of the lease term at no additional cost. The interest rate implicit in the lease is 21.91% per annum. The profit before tax of Samcon Ltd for the year ended 31 December 2019 before the above lease transactions, amounted to R550 000. The robotics-arm have a Rnil residual value and will be depreciated over the expected useful live of four years according to the straight-line method of depreciation. The company's reporting period ends on 31 December each year. REQUIRED: Marks (a) Prepare the journal entries of Samcon Ltd to account for the abovementioned lease for the financial year ended 31 December 2019. (b) Prepare the relevant notes to the financial statements of Samcon Ltd at 31 December 2019 to disclose the above lease. Please note: Your answers must comply with the International Financial Reporting Standards (IFRS), but IFRS 7 disclosures is not required. No journal narrations are required. Accounting policy notes are not required. Comparative figures are not required Round all amounts to the nearest Rand. Show all your calculations, including the amortisation table. 16 19 [35] © UNISA 2020 October/November 2020 Examination Module: FAC2601 October/November 2020 Examination Question 1 a) 1 b) 4 c) 2 d) 2 e) 4 Question 2 Units Available (400 + 275 + 500) Units Sold (300 + 100 + 250) Closing units (1175 - 650) FIFO (First in First Out) = ((500 x 30) + (25 x 25)) 2b) Closing Inventory Weighted average method Opening Balance Sales Balance Sales Purchase Balance Sales Closing inventory value = (28.57 x 525) Bell Crest Ltd NOTES FOR THE YEAR ENDED 30 JUNE 2020 Property, Plant and equipment Carrying amount at 1 July 2019 Cost price Accummulated Depreciation Revaluation surplus for the year Depreciation for the year Depreciation Capitalised Additions at cost Transfer to investment property Disposals at carrying amount Cost Carrying amount at 30 June 2020 Cost/Revaluation Accummulated Depreciation value. Calculations   Question 4 4a) Journal Entries 1) Depreciation =(849 987 + 30 000) x 25% 2) Right of use PMT = 98 500 N = 3 x 4 1/Yr = 21.91/4 PV = 4b) Disclosures SAMON LTD 2019 1) Profit before tax Expenses Depreciation (1) 3) Leases Depreciation   Powered by TCPDF () UNIVERSITY EXAMINATIONS May/June 2020 FAC2601 FINNACIAL ACCOUNTING FOR COMPANIES 100 Marks Duration 2 ½ Hours This paper consists of 9 pages. Instructions: Download this paper as soon as it has been accessed. Remember to complete and adhere to the Honesty Declaration. Please upload submission in PDF-format before the expiry of the due time. PLEASE NOTE: 1. This paper consists of FOUR (4) questions. 2. All questions must be answered. 3. Basic calculations, where applicable, must be shown. 4. Each question attempted must commence on a new (separate) page. 5. PROPOSED TIMETABLE: (Avoid deviating from this as far as possible.) Question no Subject Marks Time in minutes 1 Multiple choice questions 10 12 2 Statement of Profit or Loss and Other Comprehensive Income 50 60 3 Leases 15 18 4 Financial instruments 25 30 TOTAL 100 120 QUESTION 1 (10 marks) (12 minutes) THIS QUESTION MUST BE ANSWERED IN YOUR EXAMINATION ANSWER BOOK. EACH QUESTION HAS ONLY ONE CORRECT ANSWER. THE MARKS PER QUESTION ARE INDICATED IN BRACKETS AT THE END OF EACH QUESTION. (a) Which one of the following statements describes the role of substance over form in determining if information is useful to the users of financial information? 1) Information is relevant if it is capable of making a difference to the decisions made by users. 2) Information must faithfully represent the substance of what it purports to present. 3) The economic substance of transactions and events must be recorded in the financial statements rather than just their legal form in order to present a true and fair view of the affairs of the entity. 4) The most relevant information may have such a high level of measurement uncertainty that the most useful information is information that is slightly less relevant but is subject to lower measurement uncertainty. (2) (b) Which factors should NOT be considered in selecting a measurement basis for an asset, liability, income and expense when preparing financial statements that are useful to investors, lenders and other creditors? 1) It is necessary to consider the nature of the information that the measurement basis will produce in both the statement of financial position and the statements of financial performance as well as other factors. 2) One must consider that in most cases, no single factor will determine which measurement basis should be selected. The relative importance of each factor will depend on facts and circumstances. 3) The information provided must be relevant and faithfully represented what it purports to represent but the information provided, does not and should not have to be comparable, verifiable timely nor understandable. 4) The information provided by a measurement basis must be useful to users of financial statements. (2) (c) The following list of balances appear, amongst others, in the accounting records of Trail Ltd on 29 February 2020: R Ordinary Share Capital (shares issued at R5,50 each) ............................................. Proceeds of ordinary shares issued on 31 July 2019 ............................................... (Shares issued at R2,75 each) 8% Preference Shares issued on 1 September 2019 ............................................... (Shares issued at R4,00 each) 5 500 000 550 000 100 000 QUESTION 1 (continued) The following decision was taken by the board of directors and has not yet been recorded in the accounting records of Trail Ltd as at 29 February 2020: The directors decided on a capitalisation share issue of 1 share for every 4 shares held as at 31 August 2019 at R3,50 per share. Which one of the following options represents the Rand value of the shares that have to be capitalised: 1) R 980 000 2) R1 050 000 3) R1 071 875 4) R1 150 000 (2) (d) Soll Ltd provided a loan to Fargo Ltd on 1 November 2016 of which the capital portion is repayable in eleven equal annual installments starting on 1 July 2017. Interest on the loan is calculated at 10% per annum and is payable at the end of each financial year. The year-end of Soll Ltd is 31 December. The outstanding balance on the loan, as at 31 December 2019, amounts to R540 000 Which one of the following options represents the amount of interest received by Soll Ltd for the year ended 31 December 2019? 1) R27 000 2) R30 375 3) R57 375 4) R67 375 (2) (e) Outdoor-Track Ltd has a revenue policy intact that allow their customers to receive a 5% discount on goods sold, when those customers purchase more than 1 250 cool bags per year. On 1 June 2018 a regular customer already purchased 750 cool bags at R150 per cool bag. Outdoor-Track Ltd expects that this customer will purchase more than 1 250 cool bags during the year. The financial year end of Outdoor-Track Ltd is 28 February 2019 Which one of the following options represents the correct amount of revenue recognised in the statement of profit or loss and other comprehensive income on the 1st of June 2018? 1) R 5 625 2) R106 875 3) R112 500 4) R178 125 (2) (50 marks) (60 minutes) The following is an extract from the trial balance of Fables Ltd at 28 February 2019: R Ordinary share capital ........................................................................................................ 2 000 000 Retained earnings (1/3/2018) ............................................................................................. 930 000 Motor vehicles at carrying amount ...................................................................................... 175 000 Machinery at cost ............................................................................................................... 304 000 Accumulated depreciation – Machinery .............................................................................. 63 900 Land at cost ....................................................................................................................... 320 000 Buildings at cost ................................................................................................................. 680 000 Accumulated depreciation – Buildings ................................................................................ 204 000 Revenue (including VAT 15%) ........................................................................................... 8 395 000 Other expenses (including depreciation and finance costs) ................................................ 1 960 000 Administrative expenses .................................................................................................... 1 052 600 Distribution costs ................................................................................................................ 1 000 000 Long-term loan (AH Bank)……………………………………………………………….. 550 000 Other income ..................................................................................................................... 70 000 Additional information 1. Fables Ltd maintained a gross profit percentage of 70% on sales during the year. 2. The key personnel are as follows: Fables Ltd (Parent) Robbin Ltd (Subsidiary) Chairmen Mr Zulu Mrs Ndolo Directors (non-executive) Mrs Ndolo Mrs Rose Regional managers Mrs Samsodien Mr Harris Financial directors Mr Moodley Mr Naidoo Managing directors Mr Naidoo Mrs Sithole General secretaries Mr Seel Mr Weel During the current financial year the abovementioned directors of Fables Ltd and Robbin Ltd each attended three directors meetings. The directors of Fables Ltd received R800 per meeting and the directors of Robbin Ltd, R500 per meeting. 3. Included in salaries are the following amounts paid during the current financial year: Fables Robbin Ltd Ltd R R Financial directors ................................................................................... 240 000 200 000 Managing directors .................................................................................. 180 000 160 000 General secretaries ................................................................................. 90 000 60 000 Regional managers ................................................................................. 50 000 40 000 4. The annual pension contributions (including both personal and company contributions) amounted to R50 000 per year per non-executive director and R25 000 per year per prescribed officer. Fables Ltd and Robbin Ltd pay 40% of these contributions on behalf of their directors and their prescribed officers. 5. Mr Naidoo was relieved from his duties from both the companies on 28 February 2018. He received R40 000 each from both Fables Ltd and Robbin Ltd for his positions held there. (continued) 6. On 30 November 2018, machinery with a cost price of R100 000 and accumulated depreciation of R40 000 at the beginning of the current financial year was sold for R70 000. New machinery was bought on the same date to replace the old machinery at a cost of R120 000. 7. A motor vehicle costing R70 000 was purchased on 31 August 2018. No other transactions regarding motor vehicles took place during the current financial year. All other motor vehicles were purchased during the 2017 financial year. 8. The following rates of depreciation are applicable: Machinery 20% straight-line method Motor vehicles 25% reducing-balance method Buildings 20 years over the useful life of the buildings 9. Administration expenses consist of the following: R Stationery ...................................................................................................................... 22 600 Salaries and wages ....................................................................................................... 800 000 Fees paid to the auditor - For travelling expenses .............................................................................................. 90 000 - For audit work done ................................................................................................... 140 000 10. Other income consists of the following: R Proceeds on the sale of the motor vehicle ........................................................................ 70 000 11. S.A. normal tax of R407 299 must still be provided for. 12. Fables Ltd land was revalued on 30 June 2018 by Mr. Olen, a sworn appraiser, at market value of R350 000 and has not been accounted for in the financial records. 13. Investments of Fables (Ltd) are as follows: 13.1 Able Ltd – 1 000 ordinary shares listed on JSE bought for speculative purposes at a cost of R40 per share. The market value of these shares on 28 February 2018 and 28 February 2019 was R42 and R45 respectively. The effect of the changes in the market value of the shares have not yet been recorded for the current financial year. 13.2 Shale Ltd – 400 ordinary shares purchased on 28 February 2018 at R16 000. The shares were classified as not held for trading. Director’s valuation of these shares on 28 February 2019 was R20 000. The effect of the changes in the market value of the shares have not yet been recorded for the current financial year. 13.3 Robbin Ltd – 80 000 of the 100 000 shares held 14. The long-term loan was obtained from AH Bank Ltd at an interest rate of 12% per annum on 1 March 2016, payable in eight equal annual instalments. The first instalment commenced on 31 August 2016. The instalment and the finance costs for the current financial year have been paid and recorded. (continued) REQUIRED: Marks Prepare the statement of profit or loss and other comprehensive income and the director’s remuneration note of Fables Ltd for the financial year ended 28 February 2019. Your answer should comply with the requirements of International Financial Reporting Standards (IFRS). Please note: Comparative figures are not required. The note on accounting policy is not required. Show all calculations. Round up to the nearest Rand. 50 50 QUESTION 3 (15 marks) (18 minutes) Avairy Ltd entered into a non-cancellable lease on 1 January 2019 to lease a machine from Big Machines Ltd in order to perform excavation works on Avairy Ltd owned premises. Avairy Ltd did not elect the simplified accounting treatment for the machine and the year-end of the company is December. Big Machines Ltd made the underlying asset available for use by Avairy Ltd on 1 February 2019. The details of the lease agreement are as follows: Lease term..................................................................................................................... 5 years Annual instalments in arrears ........................................................................................ R325 000 Guaranteed residual value ............................................................................................. R110 000 Unguaranteed residual value ......................................................................................... R45 000 Fair Value of underlying asset ....................................................................................... R1 250 000 Lessee’s incremental borrowing rate ............................................................................. 13% Useful life of the underlying asset .................................................................................. 6 Years Additional information 1. Avairy Ltd made a payment to Big Machines Ltd relating to the design of the machine of R20 500 on 1 January 2019 2. Legal fees of R3 500 to inspect the validity of the contract and initial direct costs of R8 500 (assemble and transport costs) were incurred by Avairy Ltd and they paid 50% of this in cash. Initial direct costs of R4 500 were incurred by Big Machines Ltd and was paid in cash on 1 February 2019. 3. Big Machines Ltd agreed to partially reimburse Avairy Ltd for the initial direct costs incurred to the lease contract to the value of R6 000, to be received on 1 February 2020. This is classified as being a lease incentive to the lessee. 4. Avairy Ltd paid a non-refundable deposit of R10 500 on 25 May 2018 to secure the lease. 5. Avairy Ltd is required to pay an annual inspection fee of R3 500 on 31 December. 6. It was estimated that the future dismantling cost to be paid at the end of the lease term would be R15 500. The pre-tax discount rate applicable to the dismantling provision is 10%. 7. Avairy Ltd accounts for right-of-use assets according to the cost model. 8. Ownership of the underlying asset will not transfer to the lessee at the end of the lease term and the cost of the right-to-use asset does not reflect that the lessee will exercise any purchase option. QUESTION 3 (continued) REQUIRED: Marks a. Calculate the rate implicit in the lease, as at the lease commencement date. b. Calculate the value of the lease liability, as at the lease commencement date. c. Calculate the value of the right-of-use asset, as at the lease commencement date. Please note: Round up all amounts to the nearest Rand. Show all calculations. 4 5 6 15   QUESTION 4 (25 marks) (30 minutes) Diski Ltd acquired 5 000 shares in Super Ltd on 1 January 2018 at the fair value of R3,00 per share. Transaction costs amounted to R1 500 and the company elected to recognise subsequent changes in the fair value of this investment, in other comprehensive income. It is furthermore the company’s policy to release any gains or losses, resulting from these fair value adjustment to retained earnings, when the shares are sold. Additional information 1. On 31 December 2018, the market value of Super Ltd’s shares, was R3,50. 2. On 31 August 2019, 2 000 shares were sold for R3,75. 3. On 31 December 2019, the market value of Super Ltd’s shares, was R2,85. REQUIRED: Marks Journalise all above transactions for the financial year ended: 31 December 2018, and 31 December 2019. Please note: Show all calculations. 25 25 © UNISA 2020                                                                       MEMORANDUM FAC 2601   QUESTION 2 KONTIKI LIMITED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2018 ASSETS Non-current assets Notes R 8 730 887 Property, plant and equipment 1 7 802 475 Right-of-use assets 2 636 412 Investment in subsidiary 3 292 000 Current assets 1 850 300 Inventories 5 443 800 Trade and other receivables 480 000 Financial asset at fair value through profit or loss 4 137 500 Bank/Cash and cash equivalents 789 000 Total assets KONTIKI LIMITED NOTES AT 31 DECEMBER 2018 1. Property, plant and equipment Carrying amount 1/1/2013 Cost Accumulated depreciation Land Factory and office buildings Machinery and equipment Motor Vehicles Total R 1 300 000 1 300 000 - R 4 544 000 4 800 000 (256 000) R 540 000 660 000 (120 000) R 384 000 720 000 (336 000) R 6 768 000 7 480 000 (712 000) Depreciation Additions at cost Disposals at carrying amount Depreciation capitalised Revaluation Carrying amount 31/12/2013 Cost/Valuation Accumulated depreciation - - - - 200 000 (110 525) 1 200 000 - 45 000 - (63 000) - (45 000) (159 000) 420 000 (68 000) - (299 525) 1 200 000 (68 000) - 200 000 1 500 000 1 500 000 - 5 678 475 6 045 000 (366 525) 432 000 660 000 (228 000) 577 000 900 000 (323 000) 7 802 475 8 685 000 (882 525) Factory and office buildings consist of a factory and an office building, situated on Erf 1234, Rosslyn, Tshwane. Land was revalued to fair value on 28 February 2018 by Mrs Jomo, a sworn appraiser. QUESTION 2 (continued) 2. Right-of-use assets – Leases Motor Total vehicles R R Carrying amount at the beginning of the year - - Additions (calc 1) 848 550 848 550 Depreciation (calc 2) Total 3. Investment in subsidiary 292 000 Shares at cost 160 000 Loan to subsidiary 132 000 4. Financial assets Current financial asset at fair value through profit or loss Listed 25 000 Ordinary shares in Kaizer Ltd at fair value of R5,50 137 500 5. Inventories 443 800 - Raw materials (380 000 x 60%) x 85% 193 800 - Work in progress 250 000 6. Trade and other receivables Trade receivables 480 000 480 000 Calculations: 1. Cost price of right-of-use asset – motor vehicle 1.1 Calculation of the interest rate implicit in the lease PV = R1 005 000 (1 000 000 + 5 000) N = 4 FV = R400 000 [300 000 + (400 000 – 300 000)] PMT = R246 367 i = ? = 11,9% 1.2 Calculation of the cost price of the asset PV of lease liability + initial direct cost incurred by the lessee FV = R150 000 N = 4 PMT = R246 367 i = 11,9% PV = R845 550 (PV of lease liability) Cost price of asset = R845 550 + R3 000 (direct cost) = R848 550 QUESTION 2 (continued) 2. Depreciation – right-of-use asset (leased) Cost of right = R848 550 Depreciation (shorter period of useful life of asset and lease term) = R848 550  4 = R212 138 3. Depreciation – owned assets 3.1 Vehicles Sold – 240 000 x 20% x 7/12 = R28 000 240 000 – 144 000 – 28 000 = R68 000 (carrying amount of sold vehicle) Remaining – (720 000 – 240 000) x 20% = R96 000 Total depreciation for vehicles – 28 000 + 96 000 = R124 000 3.2 Machinery and equipment 540 000 x 20% = R108 000 Depreciation capitalised: 108 000 x 5/12 = R45 000 108 000 – 45 000 = R63 000 3.3 Factory and office buildings Factory – 4 800 000 x 2% = R96 000 Office building – Cost (1 200 000 + 45 000) x 2% x 7/12 = R14 525 Total depreciation for factory and office building – 96 000 + 14 525 = R110 525 Opening accumulated depreciation balance of factory building: (64 000 + 96 000 + 96 000) = R256 000 2015 – 4 800 000 x 2% x 8/12 = R64 000 32 months 2016 – 4 800 000 x 2% = R96 000 or R4 800 000 x 2% x = R256 000 12 2017 – 4 800 000 x 2% = R96 000 4. Investments Financial assets through profit or loss 25 000 x R5,50 137 500 QUESTION 3 a) BOSS LTD STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 28 FEBRUARY 2018 Note R Revenue (7 563 000 + 308 370 (calc 1)) 7 871 370 Cost of sales (60% x 7 871 370) Gross profit (40% x 7 871 370) 3 148 548 Other income (156 000 + [(20 000 x R2,50) – (20 000 x R2,00)] – R80 000 + R5 000 (calc 2) + R41 630 (calc 1)) Distribution costs Administrative expenses 132 630 (16 000) (1 977 000) Other expenses (590 000 – 6 000 + 5 463 (calc 3) – 52 500 (calc 4)) (536 963) Finance costs (calc 4) (52 500) Profit before tax 1 698 715 Income tax expense (184 700) Profit for the year 514 015 Other comprehensive income for the year 500 000 Fair value adjustment on financial assets at fair value through other comprehensive income [(R6,50 – R5,50) x 100 000] Gain on property revaluation (900 000 – 500 000) Total comprehensive income for the year 1 014 015 b) BOSS LTD NOTES FOR THE YEAR ENDED 28 FEBRUARY 2018 1. Profit before tax Profit before tax is calculated after taking the following disclosable items into account: R Income Revenue 7 871 370 Fair value adjustments of financial assets at fair value through profit or loss 10 000 Profit on sale of non-current assets 5 000 Dividends received from financial assets 76 000 - Financial assets at fair value through other comprehensive income (listed investment) 40 000 - Financial assets at fair value through profit or loss (listed investment) 36 000 Expenses Staff costs Auditors remuneration - Audit fees 35 000 - Expenses 8 000 Depreciation 220 000 Lease expenses 5 463 QUESTION 3 (continued) Calculations: 1. Finance income n=1 i = 13,5% FV= R350 000 PV = 308 370 Finance income: R350 000 – R308 370 = R41 630 2. Profit/Loss on sale of motor vehicle R120 000 x 25% = R30 000 (Motor vehicle depreciation year 1) R120 000 x 25% x 6/12 = R15 000 (Depreciation current year) Carrying value = R75 000 R80 000 – R75 000 = R5 000 3. R Year 1: (3000 x 6) + (4 000 x 6) 42 000 Year 2 and 3: (3 500 x 24) 84 000 Year 4: (1 000 x 12) 12 000 Maintenance (138 000 x 5%) (6 900) 131 100 = R131 100/48 = R2 731,25 x 2 = R5 462,50 4. Finance costs 300 000/5 = 60 000 [(300 000 + 60 000) x 15% x 10/12] = R45 000 (300 000 x 15% x 2/12) = R7 500 R7 500 + R45 000 = R52 500 5. Depreciation sold vehicle: 120 000 x 25% x 6/12 = 15 000 Depreciation new vehicle: 140 000 x 25% x 6/12 = 17 500 Depreciation other vehicles (480 000 – 140 000) x 25% = 85 000 Vehicles total depreciation: 117 500 Carrying amount equipment current year: 110 000/80% R137 500 Equipment depreciation: 137 500 – 110 000 = R27 500 Buildings depreciation: 1 500 000/20 = 75 000 Total depreciation: 75 000 + 27 500 + 117 500 = 220 000 Fac2601 May 2018 This paper consists of 7 pages N.B.: 1. This paper consists of FOUR (4) questions. 2. Basic workings, where applicable, must be shown. 3. Ensure that you are handed the correct examination answer book (blue colour for accounting) by the invigilator. 4. Each question attempted must be commenced on a new (separate) page. 5. The pass rate for this course is 50%. 6. PROPOSED TIMETABLE: Question Subject Marks Time in No minutes 1 Statement of comprehensive income (Income statement) 31 37 2 Statement of changes in equity 16 19 3 Statement of financial position - Assets (Balance sheet) 33 40 4 Theory 20 24 100 120   USE THIS INFORMATION TO ANSWER THE FOLLOWING THREE QUESTIONS The following list of balances was extracted from the books of Winners Limited for the year ended 28 February 2018: R Ordinary share capital.................................................................................................................. 1 000 000 10% Preference share capital ...................................................................................................... 200 000 Share premium – ordinary shares .............................................................................................. 210 000 Proceeds of 100 000 new no par value shares issued ....................................................... 210 000 Share issue expenses incurred on the above shares issued ............................................... 4 000 Preliminary expenses ............................................................................................................................ 3 000 Debenture issue expenses ................................................................................................................. 2 000 Land at cost ......................................................................................................................................... 100 000 Buildings at cost ............................................................................................................................. 1 000 000 Investments .......................................................................................................................................... 172 000 Long-term loan from Losers (Pty) Ltd ........................................................................................ 100 000 Loans to staff ............................................................................................................................................ 9 000 Profit before tax .................................................................................................................................. 107 000 Retained earnings – 1 March 2017 .............................................................................................. 93 800 Trade and other receivables ........................................................................................................... 86 000 Inventories – raw material ................................................................................................................... 8 000 Inventories – finished goods ........................................................................................................... 92 000 Machinery and equipment at cost ........................................................................................... 1 600 000 Accumulated depreciation – 28 February 2018 Machinery and equipment ...................................................................................................... 800 000 Buildings .......................................................................................................................................... 37 000 Provisional tax payments ................................................................................................................. 16 200 Motor cycle at cost ................................................................................................................................... ? 10% Debentures of R100 each (secured by a first mortgage bond over land and buildings) ..................................................................................................................................... 200 000 Dividends receivable (except from subsidiary) Blocks Limited .................................................................................................................................. 1 800 Crocs (Pty) Ltd ..................................................................................................................................... 800 Additional information: 1. Winners Limited was incorporated with an authorised share capital of: 800 000 Ordinary shares of R2 each % Preference shares of R5 each 2. On 1 March 2017 the directors of Winners Limited decided on the following which must still be accounted for in the following order: 2.1 To make a capitalisation issue to existing shareholders in the ratio of 1 share for every 5 ordinary shares held. The capitalisation issue must not be made out of retained earnings. FAC2601 2.2 To convert the ordinary par value shares into no par value shares. 2.3 To write off all share issue expenses, preliminary expenses and debenture issue expenses with the minimum effect towards distributable reserves. 3. The existing land (owner occupied and situated at erf 10, Rietbron) was purchased on 1 March 2015 for R100 000. Buildings at a cost of R900 000 were completed on 1 March 2016. On 1 March 2017 the land was revalued by a sworn appraiser, Mr Right, for R400 000 on the replacement basis. No entry to record the revaluation was done. Since then a modernising program of R300 000 was approved by the directors. Work to the amount of R100 000 was completed and paid for at 31 August 2017 while contracts to the value of R100 000 were already entered into for the following accounting period. 4. Investments consist of the following: 4.1 Allout Limited R 20 000 Ordinary shares of R3 each ......................................................................... 60 000 The authorised share capital of Allout Ltd is 50 000 shares of which 30 000 were issued. 4.2 Blocks Limited – listed on the Johannesburg Securities Exchange (bought for speculative purposes): 2 000 Ordinary shares of R40 each ...................................................... 80 000 Market value on 28 February 2018 was R50 per share. 4.3 Crocs (Pty) Limited – unlisted company (designated as available-for-sale): 400 Ordinary shares of R80 each ......................................................... 32 000 Directors’ valuation on 28 February 2018 amounts to R40 000. In previous years the fair value of all the investments above was equal to their cost prices. 172 000 4.4 The fair value of the above investment in the previous years were the same as the cost price of the investments. 5. The unsecured long-term loan originated on 1 March 2017 and is repayable in equal annual instalments of R20 000 on 1 March every year. Interest for the current year at the rate of 10% must still be provided for and is payable on 5 March 2018. Winners Ltd uses t