Course
Specific Financial Reporting (FAC3703)
Institution
University Of South Africa (Unisa)
Book
DESCRIPTIVE ACCOUNTING IFRS FOCUS
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
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