can you please help me solve this assignment quesions?

ASSIGNMENT BAcc 2016 LETTER SEMESTER (2) [FINANCIAL ACCOUNTING 3B] [AFE3872] DUE DATES Assignment 1 Assignment 2 Assignments Resubmissions 01August 2016 29 August 2016 30 September 2016 Vacation School 22 -24 August 2016 Page 1 of 13 Only Semester 2 modules Only Semester 2 modules All assignments of Semester 2 modules and 2nd and 3rd assignments of Year Modules All CODeL Programmes CENTRE FOR OPEN, DISTANCE AND eLEARNING Open your mind 2016 Assignments [Financial Accounting 3B - AFE3872] Dear Student, Welcome to the University of Namibia and to the Centre for Open, Distance and eLearning in particular. We hope your studies will be rewarded with success. We advise that you get all the relevant information and booklets available for distance students from your nearest UNAM centre (including the Student Letter for 2016 and the CODeL Student Handbook). These documents will provide advice on how to approach your studies and will guide you through your study materials as well as providing with useful administrative information. Study materials Your study guide is essentially your \"teacher/lecturer\". However, in addition you are required to visit the library to consult prescribed books and recommended readings that are indicated in the study guide. You are also responsible to purchase any prescribed textbooks required for your course. Furthermore, you are strongly advised to follow the guidelines in CODeL Student Handbook. Submission of assignments It is very important to complete and submit a clean, clear and well-argued assignment for marking. Make sure that you have answered the questions correctly. It is the responsibility of you as a student to make sure that every page of the completed assignment is numbered in the correct order before the pages are stapled together inside the assignment cover. Once completed, each assignment must be stapled in a separate assignment cover. Assignment covers and envelopes are supplied together with your study materials during registration or on request from your nearest campus and/or centre. You must use the envelopes addressed to the Centre for Open, Distance and eLearning for the submission of all assignments. You should complete and submit all assignments on or before the given due date in the assignment letter if you wish to be admitted to the next examination. Note that assignments received after the due dates will not be accepted and therefore will not be included in the calculation of continuous assessment (CA) marks. The CA mark and the examination mark will determine your final mark for the module. For record keeping and to ensure that assignments reach us in good time, submit your completed assignments on time to the Centre for Open, Distance and eLearning, either - through the University regional centres, or - via the UNAM Student Portal (find more information below)* Page 2 of 13 If you live in the vicinity of Windhoek and prefer to hand in assignments personally, you are welcome to hand them in at the offices of the Centre for Open, Distance and eLearning by placing them in the assignment box provided for that purpose, located in the F-Block on the Main Campus. This box is accessible at all times and is cleared daily at 07H30, Monday to Friday. Assignments left overnight are stamped with the next day's date. Take note that assignments should never be submitted directly to individual tutors or any other staff members of the University of Namibia. *When submitting your assignments electronically on the UNAM Student Portal follow the link provided on the UNAM Portal, which will import all the required information, such as your student number, name, module name and code as well as the assignment number. *You are discouraged from using Nampost for submitting assignments because of delays in the delivery. LATE SUBMISSION OF ASSIGNMENTS or WRITING OF TESTS Late assignment will not be marked. If there is a reason why you cannot meet the due date, please consider cancelling the module within the cancellation deadlines or contact your Deputy Director: Open and Distance Learning for advice. Vacation schools Attending vacation school is COMPULSORY and the vacation school timetable will be made available at your nearest UNAM centre and through the UNAM portal. My UNAM portal We recommend that you regularly (at least twice a week) access \"My UNAM Portal\" on the UNAM website for further information at the following URL: www.unam.na Closing remarks If you study conscientiously, your efforts will be rewarded. Should you need any assistance or clarification on the module contents, you can reach the relevant staff members at the contact details as given below: Tutor: Dhlamini Brenda 061-4336425 dhlamini.brenda@yahoo.co m Student Support Coordinator: Charlene Kaereho 061-2063729 ckaereho@unam.na Distance Education Officers Lizzy Xoagus Pamela Van Wyk 061-2063608 lxoagus@unam.na 061-2063721 pvanwyk2@unam.na NOTE: For additional information consult the CODeL Prospectus and UNAM General Information and Regulations Prospectus. Page 3 of 13 Note well: Plagiarism Plagiarism is \"the wrongful appropriation or purloining, and publication as one's own, of the ideas, or the expression of the ideas of another\" (OED). All published and unpublished material, whether in manuscript, printed or electronic form, is covered under this description. The Proctors' Disciplinary Regulations concerning conduct in examinations (see Part 19.4. and 19.5, p. 52) state that 'No candidate shall present for an examination as his or her own work any part of the substance of another person's work. In any written work (whether thesis, dissertation, essay, coursework, or written examination) passages quoted or closely paraphrased from another person's work must be identified as quotations or paraphrases, and the source of the quoted or paraphrased material must be clearly acknowledged.' In all written work students must be vigilant in citing the work they have referred to or quoted from (please see further Appendix D). Examples of plagiarism and detailed advice as to how to avoid it are given on http://www.admin.ox.ac.uk/edc/goodpractice/: you are strongly advised to consult this website. It has been observed that some students merely download information from the Internet, copy verbatim from other printed sources (including the Study Guide, employ other people to do their assignments for them, or plagiarise each other's assignments (either directly, that is, word-to-word, or through a rearrangement of words or paragraphs in order to deceive the tutor or marker). These practices constitute very serious academic offences of academic dishonesty, alternatively, intellectual fraud, which attract very serious and heavy penalties. Students must desist from such practices. Such students may score very high marks but invariably perform very poorly in examinations. It is in the interest of such students to endeavour to exercise their own intellectual faculties, do their own research, and personally do the set assignments. ALSO: Anyone who either wilfully, or negligently, allows his or her work to be plagiarized by another student will suffer the same penalty as the culprit (that is, an automatic 0% and possible prosecution for the offence of intellectual fraud or academic dishonesty) and no excuse whatsoever will exonerate such candidate(s) from culpability. Page 4 of 13 Financial Accounting 3B (AFE 3872) 2016 ASSIGNMENTS Assignment 1 Marks: 115 Instructions: 1. READ THE QUESTIONS CAREFULLY 2. ANSWER ALL THE QUESTIONS 3. WHERE APPROPRIATE, GIVE EXAMPLES IN ALL ASPECTS OF THE ANSWER 4. WRITE YOUR FULL NAME AND SURNAME ON YOUR ANSWER PAPER 5. WRITE YOUR STUDENT NUMBER ON YOUR ANSWER PAPER Question 1 (25 marks) Page 5 of 13 1. Assume that a company has a qualifying asset and raised specific finance of R1 000 000 at 10% on 1 March 20x7 to fund expenditure on the asset, repayable with interest on 31 December 20x8. General borrowings at a capitalisation rate of 11,2% also applied for the period. The following expenditures took place during the year ended 31 December 20x7: 1 April 20x7 1 June 20x7 1 September 20x7 30 November 20x7 R250 000 R750 000 R380 000 R40 000 All three criteria for commencing capitalisation were met by 1 April 20x7. Total borrowing costs incurred for the period were R133 000. The asset was still under construction on 31 December 20x7. Calculate the amount of borrowing costs that may be capitalised for the year ended 31 December 20x7. 2. Further expenditures of R500 000 were made evenly over the period from on 1 February 20x8 to 30 April 20x8, and the asset was substantially complete on 30 April 20x8. The asset was put into use on 1 June 20x8. Calculate the total borrowing costs that may be capitalised for the year ended 31 December 20x8, assuming the general borrowing rate changed to 11% from 1 January 20x8. 3. Prepare the journal entry to put into effect the amount to be capitalised as calculated in question 1 above in respect of the year ended 31 December 20x7. 4. Prepare the deferred taxation journal entry required for any temporary difference that may exist as a result of any borrowing costs capitalised at 31 December 20x7. You should assume that SARS allows the borrowing costs relating to this asset to be deducted in terms of section 11(bA). Assume a normal tax rate of 28% and a CGT rate of 14%. Question 2 marks] [30 D Ltd is a South African company with a 30 June year-end. During the 20x10 financial year, the company entered into two foreign currency transactions as follows: On 1 August 20x9 D Ltd acquired inventory from an American supplier at a cost of $70 000, payable on 31 October 20x9. In order to hedge against foreign currency risk exposure, D Ltd entered into a forward exchange contract on 1 August 20x9 to purchase $70 000 on 31 October 20x9 at a forward rate of R6,70/$. On 1 January 20x10, D Ltd negotiated a loan from a British bank, for an amount of 200 000, repayable in full on 31 December 20x10. Interest is payable in pounds () on the loan at a market related interest rate of 5% per annum, payable on 31 December 20x10. Page 6 of 13 Spot exchange rates 1 August 20x9 30 September 20x9 31 October 20x9 1 January 20x10 30 June 20x10 Average: 1 Jan 20x10 - 30 June 20x10 $1 = R 6,40 6,75 6,80 n/a 6,75 n/a 1 = R n/a n/a 13,10 13,40 13,00 Forward rates 1 August 20x9 30 September 20x9 30 September 20x9 $1 = R 6,70 (3 months) 6,75 (1 month) 6,90 (3 months) Required: 1. Calculate the amount at which Inventory will be recognised. 2. Calculate the net amount of cash that will be paid by D Ltd for the inventory 3. Calculate the amount of the forex gain/loss in profit or loss for 20x10 relating to the inventory. 4. If the year-end was 30 September 20x9, calculate the value of the FEC asset or liability. 5. Calculate the amount at which the loan from the British bank and interest expense will be reflected in the Statement of financial position of D Ltd as at 30 June 20x10. Question 3 [35 marks] Spring (Pty) Ltd trades in shares. The company has a 31 December year end Below is the consolidated statement of financial position of Spring (Pty) Ltd and its subsidiaries. 2010 2009 Assets Non-current assets Property, plant and equipment 344 500 158 900 Investment in Associates 60 000 45 000 Goodwill 1 600 5 000 Current assets Accounts receivable Inventories Cash 45 000 83 400 9 000 Page 7 of 13 23 000 43 000 6 000 TOTAL ASSETS 543 500 280 900 Equity and liabilities Equity Share capital Retained earnings Revaluation reserve Non-controlling interest Non-current liabilities Long term loan 100 000 121 380 86 000 27 720 60 000 68 900 61 000 0 112 400 25 000 Current liabilities Accounts payable 96 000 66 000 TOTAL EQUITY AND LIABILITIES543 500 280 900 Statement of profit or loss and other comprehensive income Revenue 120 000 Cost of sale - 40 000 Gross profit 80 000 Share of profit of the associate 15 000 Depreciation -12 900 Other cash expenses -22 500 Profit on sale of subsidiary 6 000 Profit for the year 65 600 During the year Spring (Pty) Ltd made the following investments: Transaction 1 Acquisition of subsidiary, Summer (Pty) Ltd: Spring (Pty) Ltd acquired 80% of the interest in Summer (Pty) Ltd for $60 000. Date of acquisition 1 April 2010. The acquisition price was settled with $20 000 cash and shares with a fair value of $40 000 were issued. The fair value and carrying amounts of the net assets of Summer (Pty) Ltd at acquisition were as follows: Accounts receivable 18 000 Inventories 35 000 Cash 10 000 Property, plant and equipment 50 000 Long term loan -40 000 73 000 Profit attributable to NCI for the current year amounted to $13 120 Transaction 2 Disposal of subsidiary, Winter (Pty) Ltd. Spring (Pty) Ltd owned 100% interest in Winter (Pty) Ltd. Proceeds on disposal $55 000 in cash. Date of disposal 30 June 2010. The investment was acquired on 1 January 2009 for $40 000 and goodwill of $5 000 was recognised. The fair value and carrying amounts of the net assets of Winter (Pty) Ltd on disposal date were as follow: Page 8 of 13 Property, plant and equipment Inventory Cash 20 000 17 000 7 000 44 000 Transaction 3 On 1 October 2010 Spring (Pty) Ltd acquired 30% interest in Autumn (Pty) Ltd for $10 000. The share of profit of the associate during the year was $15 000 i.e. dividends of $10 000 were received from investments in associates for the year ended 31 December 2011 and equity accounted profit was $5 000. Required 1. Complete the consolidated statement of cash flow of Spring (Pty) Ltd and its subsidiaries for the year ended 31 December 2010, in conformity with the International Financial Reporting Standards (IFRSs). Workings are required. 2. Provide the disclosures for the acquisition and disposal of the subsidiaries for the year ended 31 December 2010,so as to comply IFRSs. Question 4 [25 marks] on 1 February 2008 white Ltd , an entity with a Namibian Dollar functional currency, bought a machine to the value of 25 000 from UK. The machine was shipped free on board shipping point on 1 February 2008. The machine was received on 1March2008 and was available for use on 1 June 2008. The machine was paid for on 15 July 2008. On 1 February 2008, White Ltd entered into a FEC maturing on 15 July 2008. The hedge is designated as a for value hedge and all the hedging criteria has been met. The year-end of White Ltd is 30 June. The machine is depreciated over 4 years on the straight line method. The applicable exchange rates were as follows ($ = 1) Date 01-Feb-08 01-Mar-08 30-Jun-08 15-Jul-08 Spot rate 10.99 11.10 11.20 11.25 Forward rate 11.05(maturing on 15 July 2008) 11.14(maturing on 15 July 2008) 11.22(maturing on 15 July 2008) Required 1. Provide all journal entries for the above transaction in the books of White Ltd for the year ended 30 June 2009. (23) Provide narrations. 2. Calculate the carrying amount of the machine at 30 June 2008 as it will be disclosed in the statement of financial position. (2) Page 9 of 13 Assignment 2 Question 1 [15 marks] Sky Ltd is a construction company. Sky Ltd plans to build a shopping complex, and in order to raise money, Sky Ltd issued debentures. On 1 January 2009 Sky Ltd issued 10 000 $200 8% debentures. The debentures were issued at a discount price of $160. The debentures will be redeemed at par on 31 December 2013. The effective interest rate on debentures is 13.79732% p.a. The year-end of Sky Ltd is 31 December. Required: 1. Provide the journal entries to record this transaction in the books of Sky Ltd for the financial years ended 31 December 2009 and 31 December 2010. Narrations are required. (121/2) 2. Provide disclosure in the statement of financial position and statement of comprehensive income of Sky Ltd for the financial year ended 31 December 2009 and 31 December 2010. (21/2) Question 2 [30 marks] Green lands Ltd is an entity that is contracted by the mines to dispose off nuclear waste. The entity is renting a piece of land from the City of Windhoek and is required to restore the site to its original condition at the end of 20 years. The entity estimated that it will spend $35 000 on the restoration of the site after 20 years. Brown Ltd started operations on 1 July2008. It is expected that the provision will not be deductible for tax purposes when paid. The tax rate is 35% and a nominal after tax discount rate of 6.5% p. a. The receiver of revenue allows a deduction of 30;30;10;10;10;10 on the asset, including the restoration asset. Depreciation is provided on a straight line basis for 20 years. The actual cost of restoration amounted to $37million in 2028. Assume that this is the only transaction giving rise to temporary differences. Page 10 of 13 Required: 1. Provide the journal entries to record the transaction in the books of Green lands Ltd for the year ended 30 June 2009, 30 June 2010 and the entry to pay the restoration cost on 30 June 2028. (30) Question 3 [25 marks] Feather Textiles Ltd is an entity that manufactures linen. They are currently renting a property under a finance lease in the industrial area from where they operate. They have installed heavy industrial sewing machines in the building at a cost of $2 500 000 on 1 July 2012. The sewing machines were ready for use on 31 October 2012. The rental agreement stipulates that Feather Textiles Ltd must remove all the machinery that they have installed and renovate the building to restore it to its original state after ten years. The rental agreement was signed on 1 July 2012 and is effective for ten years. The cost of restoring the building will amount to $1 250 000 after ten years. It is the policy of Feather Textiles Ltd to measure property, plant and equipment in terms of the cost model (IAS 16). Property, plant and equipment is depreciated over 10 years on the straight - line method. The nominal after tax discount rate was 6.5% for the period up to 30 June 2013and the rate changed on 1 July 2013 to 7.8%. The tax rate remained at 35%. The year-end of tax rate is 30 June. Required: 1. Provide all the journals processed for the year ended 30 June 2013 and 30 June 2014 by Feather Textiles Ltd. Ignore deferred tax journals. (16) 2. Provide the financial statement presentation, i.e. statement of financial position and statement of comprehensive income, of the above transaction for the year ended 30 June 2014, comparatives are required. (9) Question 4 marks] [45 Julia Ltd is a Namibian entity that manufactures electronic equipment. The year-end of Julia Ltd is 30 June. On 1July 2014 Julia Ltd acquired 65% interest in Olga Ltd, an entity with a functional currency of Euro (). The consideration amounted to N$10 000. At the date of acquisition Julia Ltd determined that a plot owned by Olga Ltd was undervalued by N$1 200. The trial balance of the two entities for the year ended 30 June 2015 is given below. Julia Ltd (N$) Page 11 of 13 Olga Ltd () Land and buildings 524 000 Plant and equipment 282 000 Investment in Olga Ltd 10 000 Inventory 83 000 Accounts receivable 95 000 Bank 102 000 Share capital 200 000 Retained earnings 1 July 355 000 2014 Long term loan 130 000 Accounts payable 76 000 Sales 740 000 Cost of sales 296 000 Operating expenses 109 000 356 674 0 54 78 93 100 972 86 24 165 66 26 The following exchange rates applied: Closing rates 1=N$ 30 June 2014 12.87 1 July 2014 12.74 30 June 2015 11.98 Average rates 1 July 2013 - 30 June 13.04 2014 1 July 2014 - 30 June 13.65 2015 Additional information 1. The functional currency of Julia Ltd is Namibian dollars (N$), and this is also the presentation currency. 2. Ignore deferred tax. 3. Julia Ltd measures non-controlling interest at the proportionate share of the attributable assets and liabilities of the acquiree. Required 1. Prepare the translated trial balance of Olga Ltd for the year ended 30 June 2015. (9) 2. Prepare all the pro-forma journal entries to account for the consolidation of the Julia Ltd group. Narrations are required. (16) 3. Prepare the following consolidated annual financial statements of Julia Ltd for the year ended 30 June 2015: a. Statement of profit or loss and other comprehensive income. (4) b. Statement of financial position. (11) c. Statement of changes in equity. (5) Show your workings. Page 12 of 13 Total: 115 marks Page 13 of 13