FAC3703 Assignment 1 (COMPLETE ANSWERS) Semester 2 2024 - DUE 7 September 2024
FAC3703 Assignment 1 (ANSWERS) Semester 2 2024 - DISTINCTION GUARANTEED Course Specific Financial Reporting (FAC3703) Institution University Of South Africa (Unisa) Book DESCRIPTIVE ACCOUNTING IFRS FO...
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,FAC3702 Assignment 1 (COMPLETE ANSWERS)
Semester 2 2024 - DUE 3 September 2024 ; 100% TRUSTED
Complete, trusted solutions and explanations.
Question 1 (50 marks - 75 minutes) KassiLam Limited
(“KassiLam”) was founded by two Soweto born young
entrepreneurs while they were in Varsity. KassiLam specialises
in WIFI installation in the townships and have expanded to the
villages. KassiLam makes money from contracts with the
government through competitive bidding. KassiLam has a 31
December year end and prepares the financial statement in
accordance with the International Financial Reporting standards
(IFRS). KassiLam qualifies as a small business (SME) in terms
of the Income tax Act of South Africa. KassiLam is preparing
the financial statement for the year ended 31 December 2023
and has the following assets. 1. Vacant Land KassiLam’ s
strategy follows that of McDonald, which is to own as much of
their property. KassiLam acquired land in Limpopo and Eastern
Cape as they are expanding their business to rural areas. The
land was purchased in July 2022 for R1 050 000 in Limpopo and
R1 240 000 in the Eastern Cape. The independent appraiser has
valued this land for R1 199 000 in Limpopo and R1 300 000 in
the Eastern Cape on 31 December 2022. On 31 December 2023
the land was valued at R1 140 000 in Limpopo and R1 250 000
in the Eastern Cape. The land is measured on revaluation basis
since it was purchased, and it is the policy of KassiLam to
revalue the land every year. 2. Plant On 1 April 2021, KassiLam
purchased a cable plant that connects the African and American
continent through the Atlantic Ocean. The plant was purchased
, for a total cost of R 88 million including the inspection costs.
The cable plant is depreciated over the period of 15 years. On
purchase date, R6 million was incurred for a major inspection
and this major inspection is set to be done every 3 years with
minor upgrades. Due to drastic weather changes in South
America, an urgent major inspection was approved by
management as the internet was becoming slow. The inspection
took place between July 2023 and September 2023. The cost of
the inspection was R7,5 million and were completed and
available for use on 1 September 2023. 3. Machinery On 18
May 2023, KassiLam purchased a highly specialised
technological machine on credit from a Chinese company for
$239 000, and the machine was shipped free on board on 1
August 2023, on the same day, shipping cost of R43 899 were
settled immediately by KassiLam. It was agreed between the
supplier of the machine and KassiLam that the cost to assemble
the machine will be shared 60% and 40%, respectively. A
consultant from China and one permanent employee from
KassiLam worked on assembling the machine. The total fees
that were incurred by the consultant and employee were R87
000 and R71 000 (including his salary of R56 000). They
worked on the machine for 6 weeks and the machine was ready
for use on 1 November 2023. This machinery was estimated to
be depreciated over 7 years on a straight-line method with a
RNil residual value. FAC3702/2024/S2 3 The spot rates were as
follows: Date $: ZAR 18 May 2023 $1: ZAR17,99 1 August
2023 $1: ZAR18,22 1 November 2023 $1: ZAR18,12 The South
African Revenue Service grants KassiLam an accelerated
allowance of 50:30:20 for the machine, non-apportioned. 4.
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