Question 1 (24 marks) Atlas Ltd., a South African company, specialises in importing and distributing high-tech machinery components for the manufacturing sector. The company sources these components from a renowned American supplier and sells them to various manufacturers across South Africa. Atlas Ltd.'s financial year-end is 30 June. On 02 January 2023, Atlas Ltd. made a deposit of R100 000 to secure the purchase of machinery components valued at R500 000. These components are crucial to Atlas Ltd.'s inventory and are highly sought after by their clientele. The terms of the sale are FOB (Free on Board) shipping point. The inventory was loaded onto a boat on 01 May 2023, and its expected arrival at the Cape Town harbour was on 30 June 2023. On 25 June 2023, the machinery components arrived at the Cape Town harbour without any issues. However, Atlas Ltd.'s warehouse is located in Johannesburg. Thus, it required an additional 5 days to transfer the inventory from the harbour to the warehouse, where it would then be ready for sale. On 30 June 2023, the machinery components were delivered to and received by the warehouse, accompanied by an unpaid invoice from Speedy Logistics amounting to R20 000. Atlas Ltd. settled the invoice on 10 July 2023. Ignore VAT, taxes, and foreign exchange rates for this question. Assume that Atlas Ltd uses the periodic recording system when recording inventory. REQUIRED: 1.1 Evaluate the deposit of R100 000 made by Atlas Ltd. on 02 January 2023, in accordance with the conceptual framework, definitions, and recognition criteria established for financial statements and explain how Atlas Ltd. should recognise the deposit of R100 000 in its financial statements on 02 January 2023. Follow the instructions below to structure your response: Identify the relevant financial statement element that applies to the deposit. Provide a clear definition of the selected financial statement element. Apply the information provided to the element's definition and recognition criteria. Conclude by explaining how Atlas Ltd. should recognise the deposit of R100 000 in its financial statements based on your analysis.(10 marks) 1.2 Briefly discuss on the meaning of FOB shipping point and confirm the date when Atlas Ltd takes ownership of the inventory. (2 marks) 1.3 Briefly discuss when Atlas Ltd. should record the inventory as an asset in their records. (2 marks) 1.4 Briefly discuss how Atlas Ltd. should record on 30 June 2023 the payment to be made on 10 July 2023 to Speedy Logistics for the transportation costs. You should consider the timing and nature of the payment. (2 marks) 1.5 Prepare the general journal entries to record the transactions in Atlas Ltd. On the following dates: 1.5.1 02 January 2023 1.5.2 01 May 2023 1.5.3 30 June 2023 1.5.4 10 July 2023

Format Use Date | Detail account | Debit | Credit | --- End of Question 1 ---