Nonna is the owner and managing director of Nonnas Nurds (Pty) Ltd (hereafter, NN). NN is a tutoring centre located in Johannesburg offering accounting tuition to scholars. The company has a 31 December year-end.

Nonna needs your help to classify a few elements in her financial statements. She provided you with the following information: Extract from the current years financial statements for the year ended 31 December 2022

Note 1: The auditors of the financial statements could verify that the land was initially purchased at a cost of R750 000 in 2010.

Today the land is worth R3 500 000, which was valued by independent professional valuators, Value Max (Pty) Ltd.

The land is registered in the name of Nonnas Father, Mister F. Nonna has a verbal agreement with her father that she may use the land for her business.

The auditors have a testament (legal document drawn up by professional lawyers dated back to 5 December 2010) on file, confirming that the land will be transferred to Nonna after her fathers passing. Nonna is confident that she is allowed to present the land in her books.

Valuation: Value Max (Pty) Ltd performed the valuation on both land and buildings in November 2022. They issued a tax invoice of R25 000 to NN for the services performed.

Nonna first received the valuation report and invoice on the 5th of January 2023. She did not account for this invoice in her 2022 financial statements as she feels she only received the report and the invoice in 2023.

REQUIRED:

5.1 With reference to the information under Note 1, discuss whether Nonna may present land as an asset in her annual financial statements for the year ended 31 December 2022.

Your answer should include the full asset definition and recognition criteria as outlined by IFRS in the Conceptual Framework.

Use the following structure when compiling your answer:

- Definition and recognition (5 marks)

- Application (6 marks)

- Conclusion (2 marks) 5.2 With reference to the information under Valuation, discuss whether the invoice of R25 000 should be recorded as a liability for the current financial year ending 31 December 2022. Your answer should include the full liability definition as outlined by IFRS in the Conceptual Framework.

5.2 With reference to the information under Valuation, discuss whether the invoice of R25 000 should be recorded as a liability for the current financial year ending 31 December 2022. Your answer should include the full liability definition as outlined by IFRS in the Conceptual Framework. The recognition criteria are not required.