QUESTION 1 (IFRS 3&IFRS 10) (20) The following represents the abridged financial statements of X Ltd and its subsidiary Y Ltd; Statements of financial position as at 31 December 2019 X Y Assets PPE 200 000 200 000 Investments in Y Ltd -30 000 ordinary shares of $2 each at fair value (cost $152 500) 152 500 - Trade receivables 50 500 80 000 Cash and cash equivalence 27 000 45 000 430 000 345 000 Equity and liabilities Issued shares capital- ordinary shares at $2 each 100 000 80 000 Retained earnings 270 000 190 000 Trade payables 60 000 75 000 430 000 345 000 X Ltd acquired its interest in Y Ltd on 1 January 2017 when Y Ltds earnings amounted to $110 000. At the date of acquisition consider the carrying amount of the assets and liabilities of Y Ltd to be equal to their fair values thereon. Statement of comprehensive income for year ended 31 December 2019 X Y Gross profit 107 000 105 000 Dividend received 7 500 - Profit before tax 114 500 105 000 Income tax expense (34 500) (35 000) Profit for the period 80 000 70 000 Other comprehensive income - - Total comprehensive income 80 000 70 000 Statement of Changes in Equity for year ended 31 December 2019

Page 15 of 16 Ordinary share cap X Ordinary share cap Y Retained earnings X Retained Earnings Y Total X Total Y Balance (01-01-19) 100 000 80 000 210 000 130 000 310 000 210 000 Profit for the period 80 000 70000 80 000 70 000 Dividend paid (20 000) (10 000) (20 000) (10 000) Balance (31-12-19) 100 000 80 000 270 000 190 000 370 000 270 000 Required: prepare the consolidated financial statements. (20)

QUESTION 2 (IFRS 15) (10) Part a. A construction company enters into a contract with a customer to supply a new building. Control over the completed building will pass to the customer in two years (the contractors performance obligation will be satisfied at a point in time). The contract contains two payment options. Either the customer can pay $ 5 million in two years when it obtains control of the building, or the customer can pay $ 4 million on inception of the contract. The customer decides to pay 4 million on inception. The contractor concludes that because of the significant period between the date of payment and the transfer of the asset (the completed building) to the customer, together with the prevailing market rates of interest, that there is a significant financing component. The interest rate implicit in the transaction is 11.8%. However, because the contractor is effectively borrowing from its customer, the contractor is also required to consider its own incremental borrowing rate which is determined to be 6%. Required: Prepare well narrated journal entries to record the above. (5) Part b. Convenience Tech Shopping Ltd is a Namibian incorporated company specialising in providing online shopping via the internet. The companys standard practice is to package a customers order for a price of $175.

Page 16 of 16 The companys system operates as follows: i. Customers phone through their orders to the company representatives; ii. Company advises customer services offered and the cost thereof. For future reference purposes, all telephonic conversions are recorded; iii. iv. If the customer is agreeable to the terms provided by company representatives, a payment is made over the telephone via the customers credit card. v. On successful processing of the payment made by the customer, Convenience Tech Shopping Ltd gives the customer an access code for the companys website in order to track its order. Required: Discuss whether the online shopping service provided by Convenience Tech Shopping Ltd is a contract with a customer in accordance with IFRS 15. (5)

QUESTION 2 (IFRS 15) (10) Part a. A construction company enters into a contract with a customer to supply a new building. Control over the completed building will pass to the customer in two years (the contractors performance obligation will be satisfied at a point in time). The contract contains two payment options. Either the customer can pay $ 5 million in two years when it obtains control of the building, or the customer can pay $ 4 million on inception of the contract. The customer decides to pay 4 million on inception. The contractor concludes that because of the significant period between the date of payment and the transfer of the asset (the completed building) to the customer, together with the prevailing market rates of interest, that there is a significant financing component. The interest rate implicit in the transaction is 11.8%. However, because the contractor is effectively borrowing from its customer, the contractor is also required to consider its own incremental borrowing rate which is determined to be 6%. Required: Prepare well narrated journal entries to record the above. (5) Part b. Convenience Tech Shopping Ltd is a Namibian incorporated company specialising in providing online shopping via the internet. The companys standard practice is to package a customers order for a price of $175.

Page 16 of 16 The companys system operates as follows: i. Customers phone through their orders to the company representatives; ii. Company advises customer services offered and the cost thereof. For future reference purposes, all telephonic conversions are recorded; iii. iv. If the customer is agreeable to the terms provided by company representatives, a payment is made over the telephone via the customers credit card. v. On successful processing of the payment made by the customer, Convenience Tech Shopping Ltd gives the customer an access code for the companys website in order to track its order. Required: Discuss whether the online shopping service provided by Convenience Tech Shopping Ltd is a contract with a customer in accordance with IFRS 15. (5)