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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, FAC3703 Assignment 1 (COMPLETE ANSWERS)
Semester 2 2024 - DUE 7 September 2024 ; 100% TRUSTED
Complete, trusted solutions and explanations.
Ozone Ltd Ozone Ltd is neither a manufacturer nor a dealer that
leases ozone friendly machinery that reduces the emission of
harmful chemicals. Ozone has a 28/29 February year-end. As
part of its business strategies, Ozone Ltd entered into the
following transactions: Transaction 1 Ozone Ltd entered into an
agreement with Woodworks Ltd in which Ozone Ltd leased
machinery to Woodworks Ltd. The contract between the two
companies contains a lease in terms of IFRS 16, Leases. Ozone
Ltd purchased this machine on 1 March 2023 at a cost of R420
000. FAC3703/02/2024 The lease agreement for the machine is
as follows: Fair value of the machine on 1 March 2023 R420
000 Lease commencement date 1 March 2023 Lease instalments
payable bi-annually in arrears on 31 July and 28 February R90
000 Guaranteed residual value at the end of the lease term R15
000 Unguaranteed residual value at end of the lease term R5 000
Lease term 3 years Initial direct costs incurred by Ozone Ltd
R10 000 Initial direct costs (Legal Fees) incurred by
Woodworks Ltd R15 000 Woodworks Ltd will take ownership
of the machinery at the end of the lease term upon payment of
the guaranteed residual value. The machinery has a useful life of
5 years at the beginning of the lease term and a Rnil residual
value. The profit before tax of Woodworks Ltd for the year
ended 29 February 2024 amounted to R1 500 000 before the
lease transaction was taken into account. Assume the deferred
tax balance at 1 March 2023 was Rnil. For tax purposes, the
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