$1.$ Choose the most correct option:

a$.$ Inventory is measured at the lower of cost and net realisable value, where the latter is a market$-$based measure.

b$.$ Inventory is measured at the lower of cost and net realisable value, where the latter is an entity$-$specific measure.

c$.$ Net realisable value is measured at the fair value achievable on the open market.

d$.$ Net realisable value is measured at the selling price in the ordinary course of business less costs to bring the goods into a saleable condition and less costs to sell.

e$.$ Net realisable value is measured at the selling price, in the ordinary course of business, for the goods in their current condition, less selling costs

A$.$ Statements a and d are correct

B$.$ Statements a$,$ c and d are correct

C$.$ Statements a and e are correct

D$.$ Statements b and d are correct

E$.$ None of the options $($A$-$D above$)$ are correct

$2.$ X Limited entered the following inventory related transactions, listed in date order:

$01$ March $20$X$5$: Opening balance: $80$ units, all bought on $28$ February $20$x$5$ at R$50$ each.

$10$ March $20$X$5$: $40$ units, bought at R$70$ each.

$15$ March $20$X$5$: $160$ units, bought at R$80$ each.

$21$ March $20$X$5$: $140$ units sold.

a$)$ Using the first$-$in$-$first$-$out method, the cost of sales for the month ended $31$ March $20$X$5$ will be R$8400$ and the inventory closing balance on $31$ March $20$X$5$ will be R$11200.$

b$)$ Using the first$-$in$-$first$-$out method the cost of sales for the month ended at March $20$X$5,$ will be R$11200$ and the inventory closing balance an $31$ March $20$x$5$ will be R$8400$

c$)$ Using the weighted average method, the cost of sales for the month ended $31$ March $20$X$5$ will be R$9800$ and the inventory closing balance on $31$ March $20$X$5$ will be R$9800.$

d$)$ Using the weighted average method. the cast of sales for the month ended $31$ March $20$X$5,$ will be R$9333$ and the Inventory closing balance on $31$ March $20$X$5$ will be R$10267.$

a$.$ Statements a and c are correct.

b$.$ Statements b and c are correct.

c$.$ Statements a and d are correct.

d$.$ Statements b and d are correct.

e$.$ None of the options $($a$-$d$)$ are correct

$3.$ Depreciation on a machine that is used exclusively to manufacture inventories is always capitalised to the inventory account.

a$.$ True

b$.$ False

$4.$ A contract for revenue from services of R$100000$ is partially complete and, due to the contractual terms and conditions, none of the revenue from the partially complete contract may yet be recognised. The costs of providing the services during the current year is R$40000.$

The following journal should be processed:

Dr Wage expense $($P$/$L$)40000$

Cr Bank $40000$

Cost or services provided expensed

a$.$True

b$.$ False

$5.$ Dairy Limited manufactures specialist cheeses. As part of the production process, the cheese is required to be stored for a year in order to fully mature, As the company does not have the necessary space, the cheese is stored in a rented warehouse, for which the company pays R$500000$ per annum.

Dairy must expense this rental cost.

a$.$True

b$.$ False$6.$ CHOOSE THE MOST CORRECT OPTION: Abba Limited purchased an investment property on $1$ January $20$x$1,$ for R$500000.$ It incurs the following costs upon purchase:

Transfer duty of R$50000$

Start$-$up costs of R$10000,$ which were necessary to bring the property to the condition necessary for it to be used to earn rental income

Improvements to building totalling R$70000$

Repairs to damage caused by builders who were doing the improvements. of R$30000$

The amount at which the building is initially measured is:

a$.$R$660000$

b$.$R$630000$

c$.$R$570000$

d$.$ R$510000$

e$.$ None of the options above $($a to d$)$ are correct$\mathrm{.}7.$ CHOOSE THE MOST CORRECT OPTION:

a$.$ Investment property includes plant and machinery from which rental income is earned o which is held for capital appreciation.

b$.$ Land held for undetermined use would qualify as investment property.

c$.$ Buildings owned and leased to a third party under a finance lease would qualify as investment property.

d$.$ Property occupied by employees who pay rent at market rates would qualify as investment property.

a$.$Statements a and b are correct.

b$.$Statements a$,$ b and c are correct.

c$.$Statements a$,$ b$,$ c and d are correct.

d$.$Statements b and d are correct.

e$.$None of the options $($a$-$d$)$ are correct$\mathrm{.}8.$ CHOOSE THE MOST CORRECT OPTION:

a$.$ A property is held by Adam, a lessee, as a right$-$of$-$use asset. Adam uses the property to earn rental income. The lease is accounted for by the lessor a finance lease, on the basis that ownership of the property will transfer to Adam at the end of the lease.

b$.$ A property is held by Eve, a lessee, as a right$-$of$-$use asset. Eve uses the property to earn rental income, The lease is accounted for by the lessor an operating lease, on the basis that ownership of the property will not transfer to Eve at the end of the lease

c$.$ A property is held by Cain, a lessee, but where Cain expenses the property rentals in terms of the recognition exemption allowed in IRS $16($i$.$e$.$ Cain does not account for the property as a right$-$of$-$use asset$).$ Cain uses the property to earn rental income. The lease is accounted for by the lessor an operating lease, on the basis that ownership of the property will not transfer to Cain at the end of the lease.

Question $8$Answer

a$.$Adam, Eve and Cain should account for their properties as investment properties.

b$.$Only Adam and Eve should account for their properties as investment properties.

c$.$Only Adam should account for his property as an investment property.

d$.$Only Eve should account for her property as an investment property.

e$.$None of the options $($a$-$d$)$ are correct$\mathrm{.}9.$ CHOOSE THE MOST CORRECT OPTION:

a$.$ Investment property may be measured in terms of either the cost model or fair val model, where this choice is an accounting policy choice.

b$.$ When measuring investment property using the cost model, we must always depreciation the asset and lest it for impairments in terms of lAS $36$ Impairment of assets.

c$.$ The subsequent measurement models are selected on a property$-$by$-$property basis ie some investment properties can be measured using the cost model despite others being measured using the fair value model

d$.$ When the fair value model is applied, all investment property must be measured at fair value, regardless of whether the fair value is reliably measurable on a continuing basis.

Question $9$Answer

a$.$Statements a$,$ b and c are correct.

b$.$Statements a and b are correct.

c$.$Statements a and c are correct.

d$.$Statements b and d are correct.

e$.$None of the options $($a$-$d$)$ are correct$\mathrm{.}10.$ CHOOSE THE MOST CORRECT OPTION:

Question $10$Answer

a$.$ If a portion of a property meets tie definition of investment property and the remaining portion is owner$-$occupied, the entire property is accounted for as investment property.

b$.$If a portion of a property meets the definition of investment property and the remaining portion is owner$-$occupied, the entire property is accounted for as property, plant and equipment.

c$.$If a portion of a property meets the definition of investment property and the remaining portion is owner$-$occupied, the portion that meets the definition of investment property is accounted for as investment property and the remaining portion of the property is accounted for as property, plant and equipment.

d$.$If a portion of a property meets the definition of investment property and the remaining portion is owner$-$occupied, the entire property is accounted for as investment property on condition that the owner$-$occupied portion is insignificant.

e$.$None of the statements above are correct$\mathrm{.}11.$ TRUE OR FALSE: P Limited is the parent of S Limited. P Limited leases a property under an operating lease to S Limited. S Limited uses the property as its head$-$office. P Limited will account for this property as investment property but S Limited and the P & S Group would account for it as property, plant and equipment$\mathrm{.}12.$ TRUE OR FALSE: Transfers into and out of investment property may only occur when management intentions have changed regarding the intended use of the property, such that the definition of investment property will no longer be met, or the definition will be met when it previously had not been met