Question 1 [32 marks 48 minutes] You have been appointed as the accountant of AC Milan (PTY) Limited, a remarkably successful company. The previous accountant had already started finalising the financial statements of AC Milan (PTY) Limited for the reporting period ended 31 December 2020. You are satisfied with the statement of profit or loss and the statement of changes in equity, except for certain outstanding entries regarding cost of sales. A competent assistant accountant prepared the following information for purposes of preparing the statement of financial position: The following balances in respect of assets, liabilities and equity were obtained from the trial balance, as of 31 December 2020. Land Buildings (at cost) Additional DR information CR III 1750 000 III 8 700 000 Plant and equipment (include leased items) Trademark (at cost) III, IV, V 7 500 000 2 400 000 Buildings-accumulated depreciation III Plant and equipment: accumulated depreciation Trademarks: Accumulated amortisation III Trademarks: Accumulated impairment 3045 000 2 400 000 1 200 000 360 000 Investment in shares of other companies (Listed) Trade inventories Trade receivables 4 300 000 3 880 000 15 985 000 Allowance for credit losses VI 1950 000 Office supplies on hand (on 31 Dec 2020) Insurance prepaid on 31 December 2020 Provisional tax payments VAT input tax Term deposit (term expires on 30 April 2021) 850 000 1000 000 1980 000 960 000 215 000 Bank 1 650 000 Ordinary share capital IX 12 000 000 Retained earnings Mortgage bond Lease payable Trade payables VIII V Rent received in advance VAT output SARS Income tax payable Shareholders for dividends Short term provisions XI 51 170 000 10 535 000 7275 180 1506 794 3 922 078 96 000 1479 948 2 150 000 2 000 000 1 250 000 51 170 000 II. II.1 Subsequent measurement of assets and liabilities is as follows: Land is reflected at cost price less accumulated impairment, if applicable The buildings, plant and equipment are reflected at cost price less accumulated depreciation and accumulated impairment, if applicable The trademarks are reflected at cost price less accumulated amortisation and accumulated impairment, if applicable. II.2 11.3 IL4 11.5 11.7 Investment is shares of other companies is reflected at fair value. The term deposit is reflected amortized cost. Loans incurred are reflected at amortized costs.