+61480015851
HFAC231-1 - Financial Accounting for Companies (IFRS) Assignment
Download Solution
Order New Solution
Assignment Task
Question 1
Electronicworld (Pty) Ltd (‘Electronic’) buys and sells television sets. During the current financial year, Electronic purchased television sets from its supplier, Gadgetwarehouse (Pty) Ltd (‘Gadget’), on 1 September 2022 and took delivery of the goods on 30 September 2022. The cash cost of the television sets was R4 000 000. Gadget provided Electronic with deferred settlement terms of the purchase price to 28 February 2023, which is 4 months beyond normal settlement terms. Normal settlement terms are one month from the delivery date.
The prevailing rate of interest on similar debt is 12% per annum. Gadget took the 12% interest rate per annum, quarterly, into consideration in determining the cost price of the television sets for Electronic. The purchase price of the television sets was settled by Electronic on 28 February 2023. Electronic has a February year-end.
Required
- Calculate the cost price of the television sets and the financing element, if any, that should be recognised in the books of Electronicworld (Pty) Ltd, in terms of IAS 18, deferred settlement terms.
- Provide the journal entries to account for the inventory transaction in the records of Electronicworld (Pty) Ltd for the financial year ended 28 February 2023 . Narrations are required .
Question 2
Timely (Pty) Ltd is a sports watch manufacturer and distributor. Timely (Pty) Ltd distributes new sports watches as well as second-hand sports watches that customers trade in for later versions. The company has a 30 June year-end.
Below is an extract from the trial balance of Timely (Pty) Ltd for the 30 June 2023 year- end which the entity is in the process of finalising.
|
|
R |
|
Sales |
5 725 000 |
|
Purchases – raw materials (components) |
875 000 |
|
Purchases – second-hand watches |
277 347 |
|
Labour costs – hourly paid employees |
|
|
Factory staff |
210 000 |
|
Administration and selling staff |
180 000 |
|
Salaries and commissions |
|
|
Factory staff |
110 000 |
|
Administrative and sales staff |
240 000 |
|
Depreciation – plant and machinery |
40 000 |
|
Depreciation – office equipment |
5 655 |
|
Interest paid |
9 817 |
|
Interest received |
10 487 |
|
Dividends received |
5 000 |
|
Other expenses |
87 900 |
|
Retained earnings as at 1 July 2022 |
230 000 |
Normal capacity at the factory of Timely (Pty) Ltd is 12 000 sports watches per year. Recent power outages have negatively affected the production at Timely (Pty) Ltd’s factory, reducing the actual production for the year to 85% of normal production levels.
|
|
2022 |
2023 |
|
|
R |
R |
|
Raw materials (cost price) |
12 000 |
21 600 |
|
Work in progress (cost price) |
65 000 |
Note 1 |
Sports watches distributed to outlets for resale :
New and second-hand sports watches are distributed to outlets for resale. The information below relates to watches that have been traded in and are now distributed to outlets for resale:
Sports watches on hand at 1 July 2022 were SW001, SW002 and SW003. There are no manufactured watches included in opening inventory. The net realisable value for opening inventory has remained unchanged from the previous year-end.
Sales staff earn a commission of 8% of the selling price.
Required
Prepare the general journal entries required in the records of Timely (Pty) Ltd to recognise the cost of sales for the year ended 30 June 2023. Journal dates and nar- rations are not required.
Question 3
You have been provided with an extract of the financial statements of IT Mania Ltd for the June 2023 year-end.
IT Mania Ltd
Statement of financial position as at 30 June 2023
|
Assets |
Rand |
|
Non-current assets |
990 000 |
|
Cash and cash equivalents |
1 650 000 |
|
|
2 640 000 |
|
Equity and liabilities |
|
|
Share capital (2 300 000 Class A shares) |
1 475 000 |
|
Retained earnings |
625 000 |
|
Liabilities (non-current liabilities plus current liabilities) |
540 000 |
|
|
2 640 000 |
The directors of IT Mania Ltd passed a resolution on the 1 st of May 2023 to repurchase 180 000 Class A shares at a maximum price of R4,55 per share.
IT Mania Ltd placed an order in the market and was able to buy back 150 000 Class A shares on the 1 st of June 2023 at an open market price of R4,20 per share.
Required
- Prepare the relevant journal entries to account for the share buyback on 1 June 2023 in the records of IT Mania Ltd. Dates and narrations are not required for the journal entries.
- Prepare the Extract of the Statement of Financial Position for IT Mania Ltd as at 30 June 2023 after the share buyback.
- According to Section 48 of the Companies Act, 71 of 2008, a company may repurchase its own shares. After the repurchase, the company must meet the solvency and liquidity requirements as set out in the Companies Act, No.71 of 2008. Discuss whether IT Mania Ltd meets the solvency and liquidity requirements after the share buyback. Provide supporting reasons / amounts for your answer.
Question 4
You have been provided with the draft annual consolidated financial statements of Solar (Pty) Ltd for the year ended 30 June 2023:
SOLAR (PTY) LTD
Consolidated Statement of Profit or Loss and Other Comprehensive Income for the year ended 30 June 2023
|
|
|
2023 Rand |
|
Revenue |
|
437 670 000 |
|
Cost of Sales |
|
(259 782 250) |
|
Gross profit |
|
177 887 750 |
|
Other income |
1 |
375 000 |
|
Other expenses |
2 |
(126 903 105) |
|
Finance costs |
|
(450 000) |
|
Profit before tax |
|
50 909 645 |
|
Income tax expense |
3 |
(14 422 700) |
|
Profit for the year |
|
36 486 945 |
|
Other comprehensive income |
|
- |
|
Total comprehensive income for the year |
|
36 486 945 |
|
Profit attributable to: |
|
|
|
Owners of the parent |
|
35 400 000 |
|
Non-controlling interest |
|
1 086 945 |
|
|
|
36 486 945 |
Total comprehensive income attributable to
|
Owners of the parent |
35 400 000 |
|
Non-controlling interest |
1 086 945 |
|
|
36 486 945 |
|
|
Notes |
2023 Rand |
2022 Rand |
|
Assets |
|
|
|
|
Non-current assets |
|
|
|
|
Land at cost |
4 |
160 000 000 |
140 000 000 |
|
Plant and machinery |
4 |
56 250 000 |
65 000 000 |
|
Vehicles |
4 |
4 512 250 |
5 405 000 |
|
Total non-current assets |
|
220 762 250 |
210 405 000 |
|
Current assets |
|
|
|
|
Inventory |
|
41 200 000 |
42 800 000 |
|
Trade receivables |
|
36 200 000 |
33 655 000 |
|
Financial assets – held for trading |
|
740 000 |
330 000 |
|
Bank and cash |
|
39 343 065 |
16 420 000 |
|
Total current assets |
|
117 483 065 |
93 205 000 |
|
Total assets |
|
338 245 315 |
303 610 000 |
|
Equity and Liabilities |
|
|
|
|
Ordinary share capital |
|
200 500 000 |
200 500 000 |
|
Retained earnings |
|
85 662 500 |
51 350 000 |
|
Non-controlling interest |
|
5 724 445 |
5 000 000 |
|
Total equity |
|
291 886 945 |
256 850 000 |
|
Non-current liabilities |
|
|
|
|
Long-term loans |
|
14 760 550 |
15 870 550 |
|
Deferred tax |
|
28 000 |
- |
|
Total non-current liabilities |
|
14 788 550 |
15 870 550 |
|
|
2023 Rand |
2022 Rand |
|
Current liabilities |
|
|
|
Current portion of long-term loans |
1 110 000 |
1 110 000 |
|
Trade payables |
8 759 820 |
12 559 450 |
|
Taxation payable: SARS |
19 700 000 |
16 020 000 |
|
Shareholders for dividends |
2 000 000 |
1 200 000 |
|
Total current liabilities |
31 569 820 |
30 889 450 |
|
Total liabilities |
46 358 370 |
46 760 000 |
|
Total equity and liabilities |
338 245 315 |
303 610 000 |
SOLAR (PTY) LTD
Consolidated Statement of changes in equity for the year ended 30 June 2023
|
|
Share capital |
Retained earnings |
Non-control- ling interest |
Total equity |
|
Balance at 1 July 2022 |
200 500 000 |
51 350 000 |
5 000 000 |
256 850 000 |
|
Total comprehen- sive income for the year |
- |
35 400 000 |
1 086 945 |
36 486 945 |
|
Dividends |
- |
(1 087 500) |
(362 500) |
(1 450 000) |
|
Balance at 30 June 2023 |
200 500 000 |
85 662 500 |
5 724 445 |
291 886 945 |
Required
Prepare the Consolidated Statement of Cashflows using the indirect method for the financial year ended 30 June 2023 in accordance with International Financial Report- ing Standards (IFRS).
This HFAC231-1 - Accounting and Finance has been solved by our PhD Experts at My Uni Papers.