QUESTION 1 Converse Limited is a manufacturing company with a 31 December year-end. The company owns a variety of assets, and they use the following accounting policies to account for their assets: . Land and buildings are accounted for using the revaluation model, with revalua- tions being done every third year on 1 January. The next revaluation date is 1 January 2022. The accumulated depreciation is eliminated on revaluation and the revaluation surplus is realised on the sale of the asset. Investment property is accounted for using the fair value model. Depreciation is accounted for on the straight-line method for all classes of assets. Office property Converse Limited purchased a property on 1 July 2019. The building situated on the property consists of three floors, equal in size, and all three floors have been occupied by Converse Limited to use as the company's head office space. Due to downsizing, Converse Limited now only requires two of the three floors as head office space, and the directors, therefore, decided to rent out the top floor of the building. The top floor was rented out to a third party from 1 January 2022. (41 marks) The building is estimated to have a useful life of 30 years and a residual value of R600 000. These estimates have been checked and remained unchanged at each reporting date and the following values are applicable to the property: Land portion Building portion Purchase price 1 July 2019 Market value 1 January 2022 Market value 31 December 2022 2 R250 000 R300 000 R310 000 REQUIRED: R4 500 000 R5 700 000 R6 000 000 Assume a Corporate Income Tax Rate of 28% and that SARS allows for a building allowance of 5% on the office building. The building allowance is not apportioned for part of the year. HFAC332-1-Jan-Jun 2023-SA1-CP-V3-12102022 Prepare the Statement of Financial Position of Converse Limited as at 31 December 2022, showing all the balances, including deferred tax, relating to the property. Com- parative figures are also required. Notes to the financial statements are not required. (41 marks)

Converse Limated is a manulacturing company with a 31 December year-end. The company owns a variety of assets, and they use the following accounting policies to account for their assets: - Land and builings are accounted for using the revaluation model, with revaluatons being done every third year on 1 January. The nexd revaluation date is 1 January 2022. The accumulated depreciation is oliminated on revaluation and the revaluation suplus is realsed on the sale of the asset. - Imvestment property is accounted for using the fair value model. - Depreciation is aceounted for on the straight-ine method for all classes of assets. Otfice property Cenverse Limited purchased a property on 1 Jul 2019. The bulding situated on the property consists of three foors, equal in size, and all three foors have been occupied by Converse Limited to use as the companys head offce space. Due to downsiang. Converse Limted now only requires two of the three foors as head office space, and the drectors, therefore, docided to rent out the top foor of the bulding. The top fooe was rented out to a third party from 1 January 202 ? The bulding is estmased to have a uselul Me of 30 years and a residual value of R600 000. These estmates have been checked and remained unchanged at each feporting date and the followng values are applicabie to the property: Assume a Corperale Income Tax Rate of 28% and that SNRS allows for a bulding alowance of 5% on the office bulding The bulding allowance is not apporioned for pat of the yet. 2 REQUIFED: Prepave the Etaternent of Financial Postion of Converse Limated as at 31 Decencer 2022, shoving all the balences, inciuting deferied tax, letating to the property. Com: parative foures are aso required Notes to the fhancial statements are net requised. (41 mark)