FAC3703 Assignment 1 Semester 2 - DUE 7 September 2024
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Course
Specific Financial Reporting (FAC3703)
Institution
University Of South Africa
Book
Fundamentals of International Financial Accounting and Reporting
FAC3703 Assignment 1 (COMPLETE QUESTIONS & ANSWERS) Semester 2 2024 - DUE 7 September 2024 ;100 % TRUSTED workings, Expert Solved, Explanations and Solutions. For assistance call or W.h.a.t.s.a.p.p us on ...(.+.2.5.4.7.7.9.5.4.0.1.3.2)...........
Ozone Ltd Ozone Ltd is neither a manufacturer nor a...
FAC3703 Assignment 1 Due 7 September 2024 (Detailed Answers)
Basic Accounting Equation
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FAC3703
ASSIGNMENT 2 SEMESTER 2 2024
UNIQUE NO.
DUE DATE: 7 SEPTEMBER 2024
, FAC3703
Assignment 1 Semester 2 2024
Unique Number:
Due Date: 7 September 2024
Specific Financial Reporting
a. )
To prepare the journal entries for Transaction 1 in the accounting records of Woodworks
Ltd for the year ended 29 February 2024, we need to consider the lease classification
under IFRS 16. Given that Woodworks Ltd will take ownership of the machinery at the
end of the lease term, the lease is classified as a finance lease.
Here are the journal entries:
Initial Recognition on Lease Commencement (1 March 2023):
1. Recognize the Right-of-Use Asset and Lease Liability:
The Right-of-Use Asset is initially recognized at the present value of
the lease payments (including initial direct costs).
The lease liability is recognized at the present value of the lease
payments over the lease term.
Calculation of Present Value of Lease Payments:
o Lease payments: R90,000×6=R540,000
o Residual value: R15,000
R15,000
R15,000 (guaranteed)
, o Total lease payments: R540,000+R15,000=R555,000R540,000 + R15,000
= R555,000
R540,000+R15,000=R555,000
o Discount rate: (Implicit rate not provided, assumed to be market rate).
o Present Value of Lease Payments: To be calculated using the appropriate
discount factor.
Journal Entry:
o Dr Right-of-Use Asset
Total Present Value of Lease Payments + Initial Direct Costs
o Cr Lease Liability (Total Present Value of Lease Payments)
o Dr Lease Liability R15,000R15,000R15,000
o Cr Cash R15,000R15,000R15,000 (For initial direct costs paid by
Woodworks Ltd)
(You may need to calculate the exact present value based on the discount rate).
Lease Payments During the Year:
2. First Lease Payment on 31 July 2023:
o Dr Lease Liability
(Portion of the Lease Liability attributed to the lease payment)
o Cr Bank R90,000
R90,000
R90,000
3. Second Lease Payment on 28 February 2024:
o Dr Lease Liability
(Portion of the Lease Liability attributed to the lease payment)
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