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FAC2601 Assignment 2 Semester 1 2022 Solutions R50,00
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FAC2601 Assignment 2 Semester 1 2022 Solutions
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  • May 9, 2022
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  • 2022/2023
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Financial Accounting for Companies
FAC2601
Department of Financial Accounting
Assignment 02 for Semester 01 (compulsory)
Unique Number: 173709
Due Date: 6 April 2022
ASSIGNMENT 02 (30 marks) (36 minutes)
The following balances were extracted from the trial balance of Bell Crest Ltd on 30 June 2020:




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. Mr. Blog an experienced independent sworn
appraiser determined that the fair value of the land obtained on 1 August 2016 to be
R850 000 on 1 October 2019.

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 Ltd 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withdrawn completely from use on 1 September 2019 after health inspectors prohibited the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.

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