FIRST SEMESTER 2023 ASSESSMENT 01 (20 marks) (180 minutes) Answer the following theoretical discussion type questions. Indicate your question number and discuss the question in detail. 1. Occasionally companies build up large reserves from their accumulated profits. To enable shareholders to derive some tangible benefits from these reserves, the company may decide to capitalise these reserves and distribute them among the shareholders in the form of capitalisation shares. The following balances were taken from the books of ZTL Ltd on 31 December 2023, the financial year end of the company: Included in the capital structure above are the following transaction that took place during the current financial year that ended on 31 December 2023: - A Capitalisation issue that the directors made on 1 December 2023 of one ordinary share for every four shares held at R2,00 per share; The directors of the company also approved the following transactions during the year: - The issue of 500012% cumulative preferences shares at R5 per share on 1 November 2023. - Dividends on ordinary shares was declared at 10c per share on 31 December 2023. No dividends were declared or paid during the previous financial year. REQUIRED: a) Calculate the rand value of the capitalisation share issue to the shareholders and provide the journal entry to record this transaction. Please motivate your answer. (4) b) Calculate the dividend amount payable for the year ended 31 December 2023. (4) 2. You are the senior audit manager of Long Grow Ltd. Upon completion of the audit of Long Grow Ltd you were offered a weekend getaway to a luxury resort as a gift for your hard work at Long Grow Ltd. REQUIRED: Please discuss whether it will be ethical for you to accept this gift? (2) 7 [TURN OVER] FAC2601/Ass01/1/2023 ASSESSMENT 01 (First semester) (continued) 3. As a member of the accounting profession, you have registered for courses to earn CPD (continuous professional development) hours as required by the profession. REQUIRED: Please discuss the professional value and attitudes this will fall under in accordance with the CA2025 Competency Framework and what does it mean? (2) 4. Conversion costs are costs incurred in the conversion of raw materials into finished products ready for sale. REQUIRED: Please discuss which costs can be included in the conversion of raw materials into finished products ready for sale as per the requirements of IAS 2? Included in the capital structure above are the following transaction that took place during the current financial year that ended on 31 December 2023: - A Capitalisation issue that the directors made on 1 December 2023 of one ordinary share for every four shares held at R2,00 per share; The directors of the company also approved the following transactions during the year: - The issue of 500012% cumulative preferences shares at R5 per share on 1 November 2023. - Dividends on ordinary shares was declared at 10c per share on 31 December 2023 . No dividends were declared or paid during the previous financial year. REQUIRED: a) Calculate the rand value of the capitalisation share issue to the shareholders and provide the journal entry to record this transaction. Please motivate your answer. (4) b) Calculate the dividend amount payable for the year ended 31 December 2023. (4) 2. You are the senior audit manager of Long Grow Ltd. Upon completion of the audit of Long Grow Ltd you were offered a weekend getaway to a luxury resort as a gift for your hard work at Long Grow Ltd. REQUIRED: Please discuss whether it will be ethical for you to accept this gift? (2) 7 [TURN OVER] FAC2601/Ass01/1/2023 ASSESSMENT 01 (First semester) (continued) 3. As a member of the accounting profession, you have registered for courses to earn CPD (continuous professional development) hours as required by the profession. REQUIRED: Please discuss the professional value and attitudes this will fall under in accordance with the CA2025 Competency Framework and what does it mean? (2) 4. Conversion costs are costs incurred in the conversion of raw materials into finished products ready for sale. REQUIRED: Please discuss which costs can be included in the conversion of raw materials into finished products ready for sale as per the requirements of IAS 2 ? 5. A score that is used to determine what financial reporting framework should be used is referred to as the Public Interest Score (PIS). REQUIRED: Please discuss how the Public Interest Score (PIS) should be calculated to determine the financial reporting framework to be used? (4) 6. Elec Ltd was a state-owned company (as defined by the Public Finance Management Act (PFMA) that provided electricity and in the current financial year ending 31 December 2023, Elec Ltd was privatized. The company had a Public Interest Score of 250 and their annual financial statements are being compiled independently. REQUIRED: Please discuss which reporting framework can be used by Elec Ltd for the financial year ending 31 December 2023