Exam (elaborations)
FAC3703 Assignment 1 Semester 2 2024 - DUE 7 September 2024
- Institution
- University Of South Africa (Unisa)
FAC3703 Assignment 1 Semester 2 2024 - DUE 7 September 2024 QUESTIONS WITH DETAILED ANSWERS
[Show more]
Content preview
FAC3703 Assignment 1Semester 2 2024 - DUE 7
September 2024
QUESTIONS WITH ANSWERS
, FAC3703 Assignment 1 Semester 2 2024 - DUE 7 September 2024
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 legal fees incurred by Woodworks Ltd are not regarded
as expenses as it was not incurred in the production of income and is
capital in nature. Transaction 2 Ozone Ltd entered into a lease agreement
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through EFT, credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying this summary from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller pablitoh11. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy this summary for R50,00. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
53022 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy summaries for 14 years now