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Exam (elaborations)

FAC3702 Exam Pack May Jun 2016 & 2017

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These are Exam question solutions as well as those that were found in assignments, study guides and practice questions. When you work through these together with explanations in your study guide, you will gain an excellent understanding of concepts, theories, techniques and methods which will allow...

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  • September 17, 2020
  • 33
  • 2018/2019
  • Exam (elaborations)
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FAC3702
EXAM COURSE - SUGGESTED SOLUTIONS


SEMESTER 1
2018




ACADEMIC HEAD
Charles Forbes
charlesf@ebs.co.za




LECTURER
Kimberly McNamara
kimberlym@ebs.co.za




Shop U21, Stoneridge Centre, 1 Stoneridge Drive, Greenstone Park, Edenvale, Johannesburg, 1610

Postnet Suite #448, Private Bag x10010, Edenvale, 1610 • www.ebs.co.za • +27 11 038 5300

, 1

FAC3702 May/Jun 2017
Suggested solution

Question 1

a) Journal entries for 2016 of Sandton property

Investment property - Land (SFP) 50 000 (1 100 000 – 1 050 000)
Fair value gain (PL) 50 000

Investment property - Building (SFP) 60 000 (2 860 000 – 2 800 000)
Fair value gain (PL) 60 000

Non-current asset held-for-sale (SFP) 3 960 000
Investment property - Land (SFP) 1 100 000
Investment property - Building (SFP) 2 860 000


W1. Sandton property



1 Oct 2014 1 Jul 2015 30 Jun 2016


IP: L: 900 000 L: 1 050 000 L: 1 100 000
B: 2 700 000 B: 2 800 000 B: 2 860 000
UL: 25 yrs = 300m 3 850 000 3 960 000
RV: 500 000
FVLCD: 3 960 000
(250 000)
3 710 000
BUT! Investment property at fair value cannot be impaired by IFRS 5!




FAC3702 - May-Jun 2017 suggested solution
© Edge Business School

, 2

b) Disclosure of PPE note

Aladdin Candles Ltd
Notes to the financial statements for the year ended 30 June 2016

3. Property, plant and equipment

Land Buildings Machinery
Carrying amount at 1 July 2015 860 000 2 000 000 842 597
Gross carrying amount (W2) 860 000 (W2) 2 044 444 950 000
Accumulated depreciation - (W2) (44 444) (W5) (107 483)
Additions (W3) 1 200 000 (W3) 2 600 000 (W5) 75 000
Revaluation (W3) 30 000 (W3) 134 000 -
Depreciation - (W4) (98 444) (W5) (114 389)
Transfer to investment property (W3) (1 230 000) (W3) (2 680 000) -
Disposal (W5) (47 500)
Cost (95 000)
Accumulated depreciation 47 500
Carrying amount at 30 June 2016 860 000 1 955 556 755 708
Gross carrying amount (W2) 860 000 (W2) 2 044 444 (W5) 930 000
Accumulated depreciation - (W2) (88 888) (W5) (174 292)


Land and buildings were revalued on 30 June 2015 by an independent sworn appraiser.
If land and buildings had been carried at cost less accumulated depreciation, the carrying amount at
reporting date would be R2 323 809 (land: R750 000 and building: R 1 573 809 (W2)(C5)).

Workings:
Reval in PY
W2. Hatfield property

360m 12m 348m 12m 336m 12m 324m 312m



RV changed: 30 Jun 2015 30 Jun 2015
1 Jul 2012
0 800 000
NRV BOY 2015: CA EOY 2015: (44 444) (C2)
L: 750 000 L: 860 000 L: 860 000
B: 1 750 000 B: 2 000 000 B: 2 000 000
RV: 0 (C2) 44 444
UL: 30 yrs = 360m 2 044 444

C1. (1 750 000 – 0) x 24/360 = 116 667
C2. (2 000 000 – 800 000) x 12/324 = 44 444

1 Jul 2014 (Reval @ BOY)
Building NRV (SFP) 2 044 444
Old cost (SFP) 1 750 000
Old AD (SFP) (C1) 116 667
Revaluation gain (OCI) 411 111 BF
Land NRV 860 000
Old cost (SFP) 750 000
Revaluation gain (OCI) 110 000 BF


FAC3702 - May-Jun 2017 suggested solution
© Edge Business School

, 3



C5: If building was at cost:
1 750 000 – 146 429 – ((1 603 571 – 800 000) x 12/324) = 1 573 809
W3. Newlands property
300m 9m 291m 2m


Reval as PPE before 31 May 2016
1 Aug 2015 30 Apr 2016 30 Jun 2016
transfer to IP

PPE PPE IP IP
L: 1 200 000 FV L: 1 230 000 FV L: 1 230 000
B: 2 600 000 B: 2 680 000 B: 3 230 000
RV: 800 000 Subsequent
UL: 30 yrs = 300m CA: L: 1 200 000 costs = 550 000
B: 2 600 000
C1. (2 600 000 – 800 000) x 9/300 = 54 000 (54 000)
2 546 000


1 Aug – 30 Apr Depreciation (PL) 54 000 (C1)
Accumulated depreciation (SFP) 54 000

30 Apr 2016 L – NRV (SFP) 1 230 000
L – old cost (SFP) 1 200 000
Revaluation gain (OCI) 30 000

Building NRV (SFP) 2 680 000
Old cost (SFP) 2 600 000
Old AD (SFP) 54 000
Revaluation gain (OCI) 134 000

IP – Land (SFP) 1 230 000
IP – Building (SFP) 2 680 000
PPE – Land (SFP) 1 230 000
PPE – Building (SFP) 2 680 000

1 – 31 May IP – Building (SFP) 550 000
Bank (SFP) 550 000


W4. 44 444 (W2) + 54 000 (W3) = 98 444




FAC3702 - May-Jun 2017 suggested solution
© Edge Business School

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