Geingos, the Management Accountant of Zama Medical Ltd appointed a person on 01 June 2018, who pretended to be an expert in the preparation of company financial statements.

The following statement of financial position was prepared on 10 June 2018 by the new accountant: Statement of Financial position

ASSETS

Land and building at carrying amount Furniture at carrying amount Vehicles at carrying amount Investments

Inventories Receivables TOTAL INTERESTS Capital Reserves

Loan

Payables

Bank Overdraft TOTAL

376 000 60 000 192 000 34 000 19 000 20 000 701 000

555 000 20 000 100 000 14 000 12 000 701 000

Ms Geingos is not satisfied with the format of the above statement of financial position and request you to assist her. You acquire the following additional information:

1. The reporting periof of Zama Medical Ltd ends on 30 June.

2. The buildings are occupied for the purposes of the activities of the entity and are accounted

for in terms of the cost model. At the date of acquisition, 01 July 2016, the land was valued at N$100 000 and buildings at N$300 000. Depreciation is written off on buildings at 4% per annum on the straight line method.

3. Furniture and vehicles were purchased on 01 July 2016 at N$80 000 and N$300 000 respectively. Depreciation is written off on furniture at 12,5% per year on cost and on vehicles at 20% per year on the diminishing balance method. The necessary write-offs for the current year have been done.

4. The investments were acquired on 01 May 2017 and consist of the following:

10 000 ordinary shares in a listed company, Cheetah Ltd N$24 000

6 000 ordinary shares in Lion (Pty) Ltd N$10 000

On 30 June 2018 the values of the shares in Cheetah Ltd and Lion (Pty) were N$28 000 and N$14 000 respectively.

5. Inventories consist of the following as at 30 June 2018:

Trading goods N$18 000

Insurance paid in advance N$1 000

Inventories are measured at lower of cost (FIFO) and net realizable value.

6. The authorized share capital of Zama Medical Ltd consist of 400 000 ordinary shares of N$1.10 each and 200 000 8% preference shares of N$1.75 each. On the 01 July 2016, the company issued 250 000 ordinary shares and 160 000 preference shares. No shares were issued during the current year. Preference share capital form part of equity.

7. The reserves consist of the following:

Retained earnings (balance at 30 June 2017, N$7 000) N$14 000

Replacement reserve (balance at 30 June 2017, N$3 000) N$6 000

Ordinary dividends declared are still owing to the shareholders, while the preference dividends of N$19 200 have been paid.

8. The loan was entered into 01 July 2016 at an interest rate of 10% per annum. The loan is secured by a mortgage bond on land and buildings and is repayable in annual installments of N$20 000 from 31 December 2018.

9. Payables consist of the following:

Trade payables

Namibian current tax payable

Shareholder for dividends

Required:

1) Write a report critically evaluating the presentation of the Statement of Financial position of Zama Medical Ltd as at 30 June 2018 above according to the requirements of IAS. (5 Marks)

2) Use your knowledge of IAS 1 and the requirements of the Namibian Companies Act 28 of 2004 Section 294 and prepare the corrected Statement of Financial position for Zama Medical Ltd as at 30 June 2018. (15 Marks)

3) Use your knowledge of IAS 1 and the requirements of the Companies Act 28 and prepare the corrected Statement of Changes in Equity of Zama Medical Ltd for the year ended 30 June 2018.

\begin{tabular}{|l|l|} \hline \multicolumn{2}{|c|}{ Statement of Financial position } \\ \hline ASSETS & \\ \hline Land and building at carrying amount & 376000 \\ \hline Furniture at carrying amount & 60000 \\ \hline Vehicles at carrying amount & 192000 \\ \hline Investments & 34000 \\ \hline Inventories & 19000 \\ \hline Receivables & 20000 \\ \hline TOTAL & 701000 \\ \hline INTERESTS & \\ \hline Capital & 555000 \\ \hline Reserves & 20000 \\ \hline Loan & 100000 \\ \hline Payables & 14000 \\ \hline Bank Overdraft & 12000 \\ \hline TOTAL & 701000 \\ \hline \end{tabular} \begin{tabular}{|l|l|} \hline \multicolumn{2}{|c|}{ Statement of Financial position } \\ \hline ASSETS & \\ \hline Land and building at carrying amount & 376000 \\ \hline Furniture at carrying amount & 60000 \\ \hline Vehicles at carrying amount & 192000 \\ \hline Investments & 34000 \\ \hline Inventories & 19000 \\ \hline Receivables & 20000 \\ \hline TOTAL & 701000 \\ \hline INTERESTS & \\ \hline Capital & 555000 \\ \hline Reserves & 20000 \\ \hline Loan & 100000 \\ \hline Payables & 14000 \\ \hline Bank Overdraft & 12000 \\ \hline TOTAL & 701000 \\ \hline \end{tabular}