Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Question 2 Mukatshi Ltd a manufacturer operates in an environment for which a fund has been established for environmental rehabilitation purposes. It is compulsory for

Question 2

Mukatshi Ltd a manufacturer operates in an environment for which a fund has been established for environmental rehabilitation purposes. It is compulsory for all businesses who operate in this specific environment to contribute. The fund is managed by independent trustees. The companys interest in the fund is estimated at 10%. Mukatshi Ltd provided a provision of R100 000 (10% of total costs) for the rehabilitation cost on 1 January 2018 (the date on which the fund was established).

The R100 000 provision is the present value of the cost discounted at 10% over 10 years.

2019

2018

R

R

Funds contributed by Mukatshi Ltd during the financial year

12 000

10 000

Fair value of funds assets at year end

300 000

110 000

During 2018 and 2019 the information relating to the fund is as follows for the years ended 31 December:

It is not possible to allocate any portion of the rehabilitation expenses to any asset. Mukatshi Ltd does not have control or joint control of, or any significant influence over the fund.

Marks

2

Provide the journal entries in respect of the rehabilitation fund in the books of Mukatshi Ltd for the years ended 31 December 2018 and 2019.

Please note:

Ignore any normal income tax implications.

Ignore any Value-Added Taxation (VAT) implications.

Journal narrations are not required.

Your answer must comply with International Financial Reporting Standards (IFRS).

13

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditing a risk based approach to conducting a quality audit

Authors: Karla Johnstone, Audrey Gramling, Larry Rittenberg

9th edition

9781133939160, 1133939155, 1133939163, 978-1133939153

More Books

Students also viewed these Accounting questions

Question

8. What are some guidelines for writing condolence messages?

Answered: 1 week ago

Question

Did you add the logo at correct size and proportion?

Answered: 1 week ago