Ultra-Foods Limited is a manufacturing company with a 30 June financial year-end.

On 1 March 2021, Ultra-Foods Limited acquired a new manufacturing property and

decided to lease the old property to another manufacturing company in terms of an

operating lease agreement.

The details of the property leased out are as follows:

Rands

Cost

Land 500 000

Buildings 1 200 000

Accumulated depreciation on building 1 July 2020 240 000

Tax base of buildings 1 July 2020 1 020 000

Fair value 1 March 2021

Land 630 000

Buildings 1 210 000

Fair value 30 June 2021

Land 650 000

Buildings 1 235 000

Additional information:

Owner-occupied property is accounted for using the cost model, and investment

property is accounted for using the fair value model.

Owner-occupied property is depreciated on a straight-line basis over 15 years with

no residual value.

The South African Revenue Service allows an annual building allowance of 5%,

and the allowance is not apportioned for part of the year.

Assume an income tax rate of 28% and that 80% of capital gains are taxable.

Assume that the cost of the property reflects its base cost for capital gains tax

purposes.

REQUIRED: Prepare the journal entries required in the records of Ultra-Foods Limited for the financial year ending 30 June 2021 to account for the above-mentioned property. Ensure to include the deferred tax calculations and round all answers to the nearest Rand.