Investment property ins Ho Proper The fair values of the above properies were determined by Mr Y. Manyana, an independent valuer who bolds a recognised and relevant professional qualification and has recent experience in the location and category of the properties being valued. The valuer determined the fair value of these properties based on current prices in an active market for similar property in the same location and condition, and subject to similar lease and otber contracts. Where inveument property is accounted for using the cost model, depreciation is provided for on the straight-line basis over 25 yeass with an RNil estimated residual value. The company's profit before tax, after taking into account all the above information, amounted to R720 000 . Ignore VAT. Assume the following: - A normal tax rate of 30% and that 66.6% of capital gains realised by the conpany on disposal of property will be taxable. - The costs of the respective assets at acquisition reflect their. 'base cost' for capital gains tax.jurposes. - Ail operating expenditure in respect of investment property is dedactible for tax purposes. - The depreciation method and etimates in respect of the useful life and residual value of the factory building remained unchanged throughout the period of ownership. - Depreciable investnent properties are not held within a business model whose objective is to consume substantially all the economic benefits embodied in the investmeat property over time. Required Disclose the above information in the notes to the financial statements of Redge Lad for the year ended 31 December 20.6 , based respectively on the following assumptions: 2. Investment property is accounted for by applying the fair value model. b. Investinent property is accounted for by applying the cost model. Your answer should comply with the requirements of International Financial Reporting Standards (IFRS). Comparative amounts are not required. 7 Malnframe system Mil The development of this product was completed during 20.3 at a cont of R.5 million. Management decided that, due to the matenial aature of the creation of this product, the development costs shall be capitalised as part of the cost of the inventory. The market demand for this product has been estimated to be oaly 10 uaits. The amertisation of the developmeat costs is based on units produced. Diring 20.3 only one product was manufhctured and this was on hand at year end. During 20.4, four Mil systems were masufuctured of which two were in inveniory at 31 December 20.4. The system that was in inventory at 31 December 20.3 was sold during the 20.4 finaneial year. The following information is available: - Coat of production for 20.3 (exeluding the capitalised development costs) amounted to R900 000 . - Cost of production for 20.44 systems (exeluding the capitalised development costs) amounted to R3 900000. There are no indications of any impairment in respeet of mainfame system Mil. Patents Separately purchased patents with a cost of R1 million and accumulated amortisation of R333 333 at 31 December 20.3 are also beld by the company. The patents are amortised on a straight-line basis over a period of 30 yeans, as the patents are regitered for that period. It is expected that the product covered by the patents will have an expected selling life of 40 years. There are no indications that the patents might be impaired. Required a. Show how intangble assets will be disclosed in the finascial statements of Blerts Lid for the year ended 31 December 20.4 in acoordance with the requirements of Intemational Financial Reporting Standards (IFRS). Accounting policy notes are required. Ignore the note on the preparation of the financial statements and complinnce with International Financial Reporting Standards (IFRS). Ignore comparative amounts. b. Calculate the carrying amount of inventories at 3I December 20.4. Investment property ins Ho Proper The fair values of the above properies were determined by Mr Y. Manyana, an independent valuer who bolds a recognised and relevant professional qualification and has recent experience in the location and category of the properties being valued. The valuer determined the fair value of these properties based on current prices in an active market for similar property in the same location and condition, and subject to similar lease and otber contracts. Where inveument property is accounted for using the cost model, depreciation is provided for on the straight-line basis over 25 yeass with an RNil estimated residual value. The company's profit before tax, after taking into account all the above information, amounted to R720 000 . Ignore VAT. Assume the following: - A normal tax rate of 30% and that 66.6% of capital gains realised by the conpany on disposal of property will be taxable. - The costs of the respective assets at acquisition reflect their. 'base cost' for capital gains tax.jurposes. - Ail operating expenditure in respect of investment property is dedactible for tax purposes. - The depreciation method and etimates in respect of the useful life and residual value of the factory building remained unchanged throughout the period of ownership. - Depreciable investnent properties are not held within a business model whose objective is to consume substantially all the economic benefits embodied in the investmeat property over time. Required Disclose the above information in the notes to the financial statements of Redge Lad for the year ended 31 December 20.6 , based respectively on the following assumptions: 2. Investment property is accounted for by applying the fair value model. b. Investinent property is accounted for by applying the cost model. Your answer should comply with the requirements of International Financial Reporting Standards (IFRS). Comparative amounts are not required. 7 Malnframe system Mil The development of this product was completed during 20.3 at a cont of R.5 million. Management decided that, due to the matenial aature of the creation of this product, the development costs shall be capitalised as part of the cost of the inventory. The market demand for this product has been estimated to be oaly 10 uaits. The amertisation of the developmeat costs is based on units produced. Diring 20.3 only one product was manufhctured and this was on hand at year end. During 20.4, four Mil systems were masufuctured of which two were in inveniory at 31 December 20.4. The system that was in inventory at 31 December 20.3 was sold during the 20.4 finaneial year. The following information is available: - Coat of production for 20.3 (exeluding the capitalised development costs) amounted to R900 000 . - Cost of production for 20.44 systems (exeluding the capitalised development costs) amounted to R3 900000. There are no indications of any impairment in respeet of mainfame system Mil. Patents Separately purchased patents with a cost of R1 million and accumulated amortisation of R333 333 at 31 December 20.3 are also beld by the company. The patents are amortised on a straight-line basis over a period of 30 yeans, as the patents are regitered for that period. It is expected that the product covered by the patents will have an expected selling life of 40 years. There are no indications that the patents might be impaired. Required a. Show how intangble assets will be disclosed in the finascial statements of Blerts Lid for the year ended 31 December 20.4 in acoordance with the requirements of Intemational Financial Reporting Standards (IFRS). Accounting policy notes are required. Ignore the note on the preparation of the financial statements and complinnce with International Financial Reporting Standards (IFRS). Ignore comparative amounts. b. Calculate the carrying amount of inventories at 3I December 20.4
