Mr Radebe bought an old vehicle from his neighbour at a cost of R50 000. The vehicle had an engine problem, therefore, he had to buy and replace the whole engine. A total amount for both installation and the engine amounted to R47 500. Mr Radebe bought this vehicle with the intention to use it to transport goods for people between the provinces within South Africa. Mr Radebe prefers his clients to book his services prior in order for him to inform them of his availability since he is never free for any day as his services are in demand.

Ms Ravele, booked the services for Mr Radebe to transport her office furniture from Gauteng to Eastern Cape. To avoid disappointments, Ms Ravele offered to pay for the services in advance to be sure that her furniture will be moved at the said time. She deposited a total amount of R15 000 into Mr Radebes business account. This represent the total amount required to deliver the furnit ure to its preferred destination.

YOU ARE REQUIRED TO:

1. Discuss the following in terms of the Conceptual Framework of 2018 how to disclose in the financial statements of Mr Radebe for the financial year end;

• Engine
• Money received from Ms Ravele.

Ms Ravele has recorded the amount she paid for transporting her furniture by Debiting Transport costs and Crediting Bank in her accounting records. With reference to the Conceptual Framework of 2018, write a Memo to Ms Ravele, advising her on the recording of the amount in the correct manner