Wonderful Walls $($Pty$)$ Ltd $($Wonderful Walls$)$ is a premier d$$cor company in South Africa, specialising in delivering top$-$quality wallpapers and wall murals. The company is a registered VAT vendor. The company's current financial year ends on $31$ December $2024.$

Asset register:

Asset Category

Asset Description

Purchase Date

Cost

$($R$)$

Residual Value

$($R$)$

Life Span: years $/\%$

Depreciation Method

Land

Industrial park plot

$01/06/2020$

$4000000$

N$/$A

N$/$A

N$/$A

Buildings

Production facility

$01/08/2020$

$?$

$2000000$

$40$

Straight$-$line

Equipment

Digital design stations

$01/04/2022$

$100000$

$10\%$

$3$

Straight$-$line

Equipment

High$-$resolution printer

$01/07/2022$

$350000$

$50000$

$7$

Straight$-$line

Machinery

Lamination machines

$01/05/2023$

$450000$

$20000$

$20\%$

Diminishing balance

Events that took place during the year that must still be accounted for:

During the current financial year, heavy rain waters flooded the production facility building. On $1$ July $2024,$ the following damages were reported:

$1.$ Roof Damage and Insurance Claim: A significant portion of the production facility's roof, amounting to $20\%$ of the total factory building, was destroyed. The total book value of the production facility building was R$11000000$ on $1$ July $2024.$ Due to Wonderful Walls being under$-$insured, the insurance company agreed to cover only $80\%$ of the damages incurred to this portion of the building$$s book value. The insurance payment was received on $1$ July $2024.$

ANNEXURE F: FORMATIVE ASSESSMENT $1$

$58$ HFAC$132-1-$Jan$-$Jun$2024-$FA$1-$LVN$-$V$3-20240119$

To repair the production facility building, the following costs were incurred and paid in cash on $31$ August $2024$:

Raw materials

R$977500($VAT inclusive$)$

Overtime to permanent employees to help with repairs.

R$195500($VAT exclusive$)$

Architect and engineering sign$-$off fees

R$172500($VAT inclusive$)$

All the repairs were finalised by $31$ August $2024.$

$2.$ The digital design station equipment was damaged and a salvage value of R$18000($no VAT$)$ was paid by a scrapyard on $20$ July $2024.$ The scrapyard is not a registered VAT vendor.

The digital design stations were replaced at a cost of R$287500($including VAT$).$ The purchase was done on credit on $31$ August $2024.$

$3.$ The high$-$resolution printer $($equipment$)$ was completely destroyed and the company decided not to replace it$.$

Additional information:

$$

Assume a Value Added Tax $($VAT$)$ rate of $15\%.$

$$

Round off to the nearest Rand.

$$

The depreciation rates and methods of the repaired assets are as follows:

Asset

Depreciation Method

Useful Life

Residual Value

Restored Production Facility Building

Same as Original $($Straight$-$Line$)$

Remaining Life of Original Building

Unchanged. As per Asset Register

Digital Design Stations

Straight$-$Line $($as before$)$

$3$ Years

Unchanged. As per Asset Register

ANNEXURE F: FORMATIVE ASSESSMENT $1$

$59$ HFAC$132-1-$Jan$-$Jun$2024-$FA$1-$LVN$-$V$3-20240119$

REQUIRED:

Prepare the general journal entries for all the transactions that occurred during the $2024$ financial year in the records of Wonderful Walls $($Pty$)$ Ltd$.$

This includes:

$$

Recording the flood damages and their financial impacts.

$$

Accounting for the costs and recovery associated with repairs and replacements.

$$

Depreciation calculations on all assets.

Instructions:

$$

Journal dates and narrations are not required.

$$

Show all calculations and reference accordingly.

$$

Organise the journal entries following the order of the asset register categories. For example, start with entries related to "Land: Industrial park plot", followed by "Buildings: Production facility", etc. Example:

Journal $1$: Land Industrial park plot

Journal $2$: Buildings Production facility

Journal $3$: Equipment Digital design stations

$(44$ marks$)$