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Assignment $1$

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Question $1$

$($Marks: $100)$

You have been appointed to assist the accountant of Freedom$-$Co $($Pty$)$ Ltd in preparing the financial statements for the year ended $31$ December $2024.$ You have been provided with the following trial balance for the year ended $31$ December $2024$:

$\backslash$table$[[,$Debit,Credit$],[$R$1$ Ordinary shares,,$7800000],[$Retained earnings at the beginning of the year,,$1275000],[$Inventory at the beginning of the year,$8100000,],[$Land at cost$,5400000,],[$Buildings at cost$,16200000,],[$Buildings accumulated depreciation at the beginning of the year,,$4050000],[$Pant at cost$,18000000,],[$Plant accumulated depreciation at the beginning of the year,,$6750000],[$Motor vehicles at cost$,6000000,],[\backslash$table$[[$Motor vehicles accumulated depreciation at the beginning of the$],[$year$]],,2100000],[$Trade payables,,$16200000],[$Trade receivables,$10800000,],[$Provision for credit losses at the beginning of the year,,$450000],[$Purchases$,36750000,],[$Revenue$,,54000000],[$Administrative expenses,$3750000,],[$Distribution expenses,$4350000,],[$Other expenses,$900000,],[$Bank$,1950000,],[$Ordinary dividend paid,$750000,],[5\%$ Preference shares at R$1,,9000000],[9\%$ Loan,,$9000000],[$Other income,,$2325000],[112950000,112950000]]$

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Additional information:

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Assignment $1$

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$2024$

Additional information:

The information below has not been processed yet.

No interest has been paid or accrued on the loan for the current year. The balance outstanding has not changed since the beginning of the year.

No preference dividend has been paid or accrued for.

A utility bill of R$540000$ relating to December $2024$ was received and paid in January $2025.$

Provision for credit losses is maintained at a percentage of $8\mathrm{.}00\%$ of the gross trade receivables balance.

Closing inventory has been valued at R$9000000.$

An expert independent valuer determined the fair value of the building at the beginning of the year as R$15750000.$ The revaluation surplus will be realised through use of the asset over its remaining useful life. The company applies the elimination method to account for revaluations. Assume no tax implications on the revaluation.

Depreciation is calculated as follows:

Rate $/$

Method

Depreciation on the building is calculated on the straight$-$line basis. This depreciation is allocated to administrative expenses.

$5\mathrm{.}00\%$

Depreciation on plant is calculated on the reducing balance method. The depreciation is allocated to cost of sales.

$10\mathrm{.}00\%$

Depreciation on motor vehicles is calculated on the units of production method. Motor vehicles are expected to travel $150,000km$ over their useful life. Kilometres travelled during the year amounted to $37,500.$ The depreciation is allocated to distribution cost.

$8.$ Motor vehicles with a cost of R$1200000$ and accumulated depreciation of R$720000$ were sold at the end of the year for $R480000$ received on the date of sale.

$9.$ New land was purchased on $31$ December $2024$ for R$3600000$ of which R$1800000$ was received immediately and R$1800000$ will be received in $2$ years' time. It is assumed that this

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transaction has a significant element of financing, and an appropriate market$-$related

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$2024$

transaction has a significant element of financing, and an appropriate market$-$related discount rate is $14\%$ per annum.

$10.$ Taxation accrual for the period was estimated at R$1020000.$

$11.$ The company issued bonus shares to the shareholders at $1$ bonus share for every $5$ held. This is a non$-$cash transaction.

$12.$ An ordinary dividend of $R750000$ was declared at year end.

$13.$ A transfer of R$1500000$ was made from retained earnings to general reserves.

$14.$ The company prepares its statement of profit and loss in accordance with the function method.

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$2024$

Q$\mathrm{.}1\mathrm{.}4$ Prepare the statement of profit and loss and other comprehensive income for

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Freedom$-$Co $($Pty$)$ Ltd for the year ended $31$ December $2024$ as required by IAS$1-$ Presentation of financial statements.

Show all workings as marks will be allocated.

Q$\mathrm{.}1\mathrm{.}5$ Prepare the statement of changes in equity for Freedom$-$Co $($Pty$)$ Ltd for the year ended $31$ December $2024$ as required by IAS$1-$ Presentation of financial statements.

A total column is required.

Round all amounts to the nearest rand.

$[$TOTAL MARKS: $100]$