Question 3 (50 marks) The following information is available for Heritage Limited: 1. The reporting period of Heritage Ltd ends on 30 June of every year. The following balances are available as at 30 June 20x8 Land and building at cost 400 000 Accumulated depreciation on buildings at 01/07/20x7 12 000 Furniture at cost 80 000 Accumulated depreciation as at 01/07/20x7 10 000 Vehicles at cost 300 000 Accumulated depreciation as at 01/07/20x7 60 000 Investments as at 01/07/20x7 34 000 Bank 96 700 Trade and other receivables 20 000 Ordinary share capital 275 000 Preference share capital 280 000 Retained earnings as at 01/07/20x7 7 000 Replacement reserves 58 250 10% Bank loan 100 000 Payables 33 500 Additional information: 1. The buildings are occupied for the purposes of the activities of the entity and are accounted for in terms of the cost model. At the date of acquisition, 01 July 20x6, the land was valued at N$ 100 000 and buildings at N$ 300 000. Depreciation is written off on buildings at 4% per annum on the straight line method. 2. Furniture and vehicles were purchased on 01 July 20x6 at N$ 80 000 and N$ 300 000 respectively. Depreciation is written off on furniture at 12,5% per year on cost and on

Page 13 of 21 vehicles at 20% per year on the diminishing balance method. The necessary write-offs for the current year still need to be done. 3. The value of the investments is valued at N$ 42 000 as at 30 June 20x8 4. Inventories consist as at 01 June 20x8 amounted to N$ 22 000. Inventories are measured at lower of cost (FIFO) and net realisable value. 5. Authorised share capital for Heritage Ltd is 400 000 ordinary shares at N$ 1,10 each and 200 000 8% preference shares at N$ 1,75 each. The company had already issued 250 000 ordinary shares at N$ 275 000 and 160 000 preference shares at N$ 280 000. The company had issued 25 000 shares at N$ 2,00 during the year. Preference share capital form part of equity. 6. The loan was entered into on 01 July 20x6 at an interest rate of 10% per annum. The loan is secured by a mortgage bond on land and buildings and is repayable in annual instalments of N$ 20 000 from 31 December 20x8. 7. Payables consist of the following: Trade payables 6 000 Namibian company tax 3 000 Dividend payable 24 500 8. Profit for the year amounted to N$ 60 000. 9. On 30 March 20x8 a new vehicle with a cost price of N$ 55 000 was purchased for use in the delivery of goods to customers. 10. At 30 June 20x8, inventory worth N$ 4 000 were stolen. Required: 1.1 Prepare the statement of financial position as at 30 June 20x8 to comply with the requirements of IFRS and Companies Act, 1.2 Prepare the following notes to accompany the financial statements and to comply with IFRS and Companies Act: ? Basis of presentation ? Statement of significant accounting policies ? Property, plant and equipment ? Financial assets ? Inventories ? Share capital and ? Non-current liabilities as at 30 june20x8; and

Page 14 of 21 1.3 The statement of changes in equity for the year ended 30 June 20x8 for Heritage Ltd to comply with the minimum requirements of the Companies Act of 2008 and International Financial Reporting Standards (IFRS). Comparative figures are required were necessary.