TRIAL BALANCE FOR THE YEAR ENDED 30 June 2020

	NOTE	DR (R)	CR(R)
Revenue			300 000 000
Cost of sales		150 000 000
Other expenses		1 400 000
Salaries assembly technicians (excluding June 2020)		1 200 000
Salaries administrative staff		1 200 000
Finance costs		850 000
Transaction costs		200 000
Distribution costs		400 000
Inventory (opening inventory as at 1 july 2019)		6 200 000
Share capital			1 000 000
Land at cost		25 000 000
Plant and machinery at cost		5 000 000
Accumulated depreciation on plant and machinery (as at 30 June 2020)			2 250 000
Bank		7 500 000
Trade and other receivables		2 000 000
Trade and other payables			2 800 500
Retained earnings			5 100 500

The tires of all the models of Speedcar Namibia cc are handmade from rubber wastes in Namibia by the Namibian clean waste re-use division of Speeds Are Us (Pty) Ltd. The tire division has its own operational manager and financial accounts. The cash flows and operations of the seat division can be clearly distinguished from the rest of Speeds Are Us (Pty) Ltd.

The board of directors of Speeds Are Us (Pty) Ltd decided on 28 February 2020 on a director meeting to implement a formal plan to close down the seat division. The company decided to import tires from South Africa, to help in the fight of air pollution, in the tire production process.

A task team was appointed on 28 February 2020 to begin with an active marketing program to close the tire division. The minutes of the meeting clearly indicate that the business operations must be suspended before 30 June 2020. The minutes also indicate that it is unlikely that a significant amendment to the plan will be made or that the plan will be withdrawn as the ministry of environment had put in a request for court intervention, should the tire production process continue.

On 28 February 20.11 the closure of the seat division qualified as a discontinued operation in terms of IFRS 5 Non-current assets held for sale and discontinued operations.

The following are the actual results of the tire division for the year ended 30 June 2020

	01/07/2019-28/02/2020 R	01/03/2020- 30/06/202R
Revenue	2 240 000	1 000 000
Cost of sales Operating costs (including depreciation of the tire	1 101 000	600 600
manufacturing machinery)	200 000	101 000
Finance costs	182 000	56 500

The following information regarding the tire division is not included in the trial balance of the tire division.

1. The closing of the tire division necessitates the dismissal of five employees. The termination benefits of these employees are estimated at N$150 000 and will be paid on 30 June 20.20.

2. One of the tire manufacturing machines is leased. Due to the closing of the seat division, it is necessary to end the lease agreement prematurely and consequently an estimated fine of N$10 000 is payable on 30 June 20.20.

3. The actual direct cost of the discontinuance for the year ended 30 June 2020 amounts to N$14 000 and the estimated direct cost of the discontinuance to be paid during May 2020 is N$57 000. 4.

The following information relates to the sale of the assets of the discontinued operation:

N$

Land - cost and tax base as at 28 February 20.20 and 30 June 20.20 (which is equal to the base cost for capital gains tax)	200 000
Land - contract price as per sale agreement	200 000
Factory buildings - cost on 1 November 20.18	600 000
Factory buildings - carrying amount on 28 February 20.11	540 000
Factory buildings - contract price per sale agreement	520 000

All other assets and liabilities will be transferred at their carrying amounts and no temporary differences arise from the other assets and liabilities of the tire division for the year ended 30 June 20.20.

It is Speeds Are Us (Pty) Ltd accounting policy to present the analysis of the discontinued operation in the notes to the financial statements

Required

(a) Discuss whether the closure of the tire division qualified as a discontinued operation in terms of IFRS 5 Non-current assets held for sale and discontinued operations. (10)

(b) After taking into account all the above information, prepare the statement of profit or loss and other comprehensive income for the year ended 30 June for Speeds Are Us (Pty) Ltd (5)

(c) Prepare the notes to the financial statements of 30 June for Speeds Are Us (Pty) Ltd for the year ended Discontinued operation;