Question 3 ( 30 marks) You are a newly appointed auditor of Otjomuise Ltd and have been presented with this statement of financial position. Otjomuise Ltd Statement of financial position as at 30 September 2018

	N$
	2018
ASSETS
NON-CURRENT ASSETS
PPE	950,000.00
Long term loans to employees	15,000.00
Investments/ financial assets	340,000.00
Total non-current assets	1,305,000.00
Current assets
Inventory	320,000.00
Trade receivables	260,000.00
Taxation	55,000.00
Cash and cash equivalents	5,000.00
Sundry expenditure:
Preliminary expenses	12,000.00
Ordinary share issue expenses	10,000.00
Preference share issue expenses	9,000.00
Underwriters commission on preference shares	14,000.00
Total current assets	685,000.00
TOTAL ASSETS	1,990,000.00
EQUTY AND LIABILITIES
Equity
Ordinary share capital and share premium	1,030,000.00
Non-distributable reserve	100,000.00
Preference share capital and share premium	242,000.00
Retained earnings	190,000.00
Total equity	1,562,000.00
Non-current liabilities
Mortgage debentures	58,000.00
Total non-current liabilities	58,000.00
Current liabilities
Trade payables	255,000.00
Bank overdraft	35,000.00
Shareholders for dividends	80,000.00
Total current liabilities	370,000.00
TOTAL EQUITY AND LIABILITIES	1,990,000.00

Otjomuise Ltd Notes to the financial statements of 30 September 2018 1. Accounting policies Property, plants and equipment Land and building are valued at cost and land is not depreciated. Buildings are depreciated over the useful life on the straight-line method. Plant and machinery and vehicles are valued at cost and are depreciated on the reducing balance method to their residual value over the expected useful lives of the assets. Inventory Inventory is valued at the lower of cost and net realisable value on FIFO basis. 2. Share capital 2018 Authorised 1 000 000 ordinary shares @ N$ 2 each 80 000 redeemable cumulative preference shares @N$ 3 each (fixed annual dividend of 12c/share) 50 000 redeemable preference shares@ N$ 2.50 each ( fixed annual dividend of 14c/share) Issued 500 000 ordinary shares @ N$ 2 each 1,000,000.00 80 000 redeemable cumulative preference shares

@N$ 3 each (fixed annualdividend of 12c/share) 240,000.00 1,240,000.00 The redeemable cumulative preference shares are redeemable at the option of the company since 01 December 2018 as a premium of N$ 0.30c/share. The directors have the authority to issue the balance of the un-issued shares until the nest annual general meeting. 3. Non-distributable reserves

	2018
Asset replacement reserve	60,000.00
Revaluation reserve	40,000.00
	100,000.00

4. Mortgage bond

	2018
15% mortgage bond	58,000.00
Repayable in monthly instalments of N$ 745.00

5. Property, plants and equipment

	Cost or valuation	Accumulated depreciation	Carrying value
Land	395,000.00	-	395,000.00
Buildings	100,000.00	-	100,000.00
Plant and machinery	570,000.00	240,000.00	330,000.00
Vehicles	155,000.00	60,000.00	95,000.00
	1,220,000.00	300,000.00	920,000.00
Financial assets	50,000.00	20,000.00	30,000.00
	1,270,000.00	320,000.00	950,000.00

6. Investments Listed 2018 100 000 shares in Trutsco Ltd ( market value N$ 300 000) 180,000.00 Shares in Etosha transport Ltd (market value N$ 60 000) 82,000.00 Unlisted 10 000 shares in Dinapama Ltd 68,000.00 5 000 shares in Etambi ( Pty) Ltd 10,000.00 340,000.00

Additional information: The minutes of various directors meeting revealed the following information: Otjomuise Ltd at the moment has a court case with a potential claim of N$ 250 000 against them. No provision has been made in the accounting records as the directors are hopeful that they with emerge victorious in the case. A contract was signed with a South African company to acquire Plant and machinery at a cost of N$ 320 000. A further acquisition of Plants valued at N$ 70 000 was approved by the directors. It was then decided at the board of directors meeting of Otjomuise Ltd held on 03 October 2018; o To redeem the 12% cumulative preference shares of the company on 30 November 2018. o To finance this redemption partly by the issue of the maximum number of 14% redeemable preference shares at a premium of 20% (The company will not be able to issue these shares at a higher premium). o To pay the backlog in the cumulative preference dividends, last provided for on 30 September 2018. o To convert the authorized ordinary shares of par value into ordinary shares on no par value on 31 December 2018. o To write off all deferred expenditure in the accounting records immediately before the conversion of par value to par value shares. Share issue expenses amounting to N$ 5 000 have been incurred. You are required to: 1. In point form, list all the items in the above draft statement of financial position that do not comply with the minimum disclosure requirements of the Companies Act and IFRS. NB: provide full details of minimum disclosure requirements. (20 marks