FAC3702/101/3/2014
Tutorial letter 101/3/2014 Distinctive Financial Reporting
FAC3702 Semesters 1 and 2 Department of Financial Accounting IMPORTANT INFORMATION: Please activate your myUnisa and myLife email addresses and ensure you have regular access to the myUnisa module site FAC3702 as well as your group site.
Note: This is an online module, and therefore your module is available on myUnisa. However,in order to support you in your learning process, you will also receive some study materials in printed format.
CONTENTS Page 1
INTRODUCTION ............................................................................................................... 4
2
MODULE FORMAT: FAC3702 ......................................................................................... 4
2.1
Fully online module ............................................................................................................ 4
2.2
Printed materials to support the online module.................................................................. 5
3
PURPOSE OF AND OUTCOMES FOR THE MODULE................................................... 5
3.1
Purpose ............................................................................................................................. 5
3.2
Outcomes .......................................................................................................................... 6
4
LECTURERS AND CONTACT DETAILS ......................................................................... 7
4.1
Lecturers............................................................................................................................ 7
4.2
Department ........................................................................................................................ 8
4.3
University ........................................................................................................................... 8
5
MODULE-RELATED RESOURCES ................................................................................. 9
5.1
Prescribed books ............................................................................................................... 9
5.2
Recommended books ........................................................................................................ 9
5.3
Electronic Reserves (e-Reserves) ..................................................................................... 9
6
STUDENT SUPPORT SERVICES FOR THE MODULE ................................................... 9
6.1
Tutor assistance ................................................................................................................ 9
6.2
Contact with fellow students ............................................................................................ 12
6.2.1 Study groups ................................................................................................................... 12 6.2.2 myUnisa........................................................................................................................... 12 6.2.3 Group discussions ........................................................................................................... 13 6.3
Unisa Library services information ................................................................................... 13
6.3.1 Unisa Library login ........................................................................................................... 13 6.3.2 Requesting books from the library ................................................................................... 13 6.3.3 Electronic requests .......................................................................................................... 13 6.3.4 Telephonic book requests................................................................................................ 13 6.3.5 Postal requests ................................................................................................................ 13 7
MODULE-SPECIFIC STUDY PLAN................................................................................ 14
7.1
Study programme ............................................................................................................ 14
7.2
Suggested study approach .............................................................................................. 15
2
FAC3702/101
8
MODULE PRACTICAL WORK AND WORK-INTEGRATED LEARNING ...................... 16
9
ASSESSMENT ................................................................................................................ 16
9.1
Assessment plan ............................................................................................................. 16
9.2
General assignment numbers .......................................................................................... 17
9.2.1 Unique assignment numbers ........................................................................................... 17 9.2.2 Due dates for assignments .............................................................................................. 17 9.2.3 Finality of due dates ........................................................................................................ 18 9.3
Submission of assignments ............................................................................................. 18
9.4
Assignments .................................................................................................................... 18
9.5
Plagiarism ........................................................................................................................ 18
10
OTHER ASSESSMENT METHODS................................................................................ 19
11
EXAMINATION ............................................................................................................... 19
11.1
Examination admission .................................................................................................... 19
11.2
Examination period .......................................................................................................... 19
11.3
Previous examination papers .......................................................................................... 19
11.4
Information on the examination ....................................................................................... 19
12
FREQUENTLY ASKED QUESTIONS ............................................................................. 20
13
SOURCES CONSULTED................................................................................................ 20
14
CONCLUSION ................................................................................................................ 20
ANNEXURE A:
COMPULSORY ASSIGNMENT 1 (WRITTEN) - FIRST SEMESTER
ANNEXURE B:
COMPULSORY ASSIGNMENT 2 (MCQ) - FIRST SEMESTER
ANNEXURE C:
COMPULSORY ASSIGNMENT 1 (WRITTEN) - SECOND SEMESTER
ANNEXURE D:
COMPULSORY ASSIGNMENT 2 (MCQ) - SECOND SEMESTER
3
1
INTRODUCTION
Dear Student We are pleased to welcome you to FAC3702 – Distinctive Financial Reporting and hope that you will find it both interesting and rewarding. We will do our best to make your study of this module successful. You will be well on your way to success if you start studying early in the semester and resolve to do the assignments properly. You will receive a number of tutorial letters during the year. A tutorial letter is our way of communicating with you about teaching, learning and assessment. This tutorial letter also contains important information about the scheme of work, resources and assignments for this module. We urge you to read it carefully and to keep it at hand when working through the study material, preparing the assignments, preparing for the examination and addressing questions to your lecturers. In this tutorial letter 101, you will find the assignments as well as instructions on the preparation and submission of the assignments. It also provides all the information you need with regard to the prescribed study material and other resources and how to obtain them. Please study this information carefully and make sure that you obtain the prescribed material as soon as possible. Right from the start we would like to point out that you must read all the tutorial letters you receive during the semester immediately and carefully, as they always contain important and, sometimes, urgent information. Please note: Because this is a fully online module, you need to use myUnisa to study and complete the learning activities for this module. You need to visit the websites on myUnisa for FAC3702 frequently. The website for the module is: FAC3702-14-S1 for first semester students; and FAC3702-14-S2 for second semester students. Because this is a fully online module, you need to go online to see your study materials and read what to do for the module. Go to the website here: https://my.unisa.ac.za and login with your student number and password. You will see FAC3702 in the row of modules in the orange blocks at the top of the webpage. Remember to also check in the –more-tab if you cannot find it in the orange blocks. Click on the module you want to open. We hope that you will enjoy this module and wish you all the best!
2
MODULE FORMAT: FAC3702
2.1
Fully online module
Please note that this module is offered fully online. All study material for this module will be available on myUnisa. It is thus very important that you register on myUnisa and access the module site on a regular basis. You must be registered on myUnisa to be able to access your learning material, submit your assignments, gain access to various learning resources, “chat” to your lecturer and fellow students about 4
FAC3702/101
your studies and the challenges that you might encounter and to participate in online discussion forums. Importantly, myUnisa contains the Learning Units tool from which you will only be able to access the study material for this module if you have registered and have access to myUnisa. 2.2
Printed materials to support the online module
Because we want you to be successful in this online module, we also provide you with some of the study materials in printed format. This will allow you to read the study materials, even if you are not online. In addition to this tutorial letter you will receive a printed copy of the online study materials from myUnisa. While these printed materials may appear slightly different from the online study materials, they are exactly the same and have been duplicated from the online myUnisa website. Remember, the printed support materials are a back-up to everything that is found online, on myUnisa. In other words, you should NOT wait for the printed support materials to arrive to start studying. Please consult with the myStudies@Unisa publication for more information on the activation of your myLife email address as well as obtaining access to the myUnisa module site. You will receive the following tutorial letters for this module (which will also be available online): Tutorial letter 501 101 102 103 201 202
Content Learning Units (there is NO study guide for this module) Important information as compulsory assignments Questions and suggested solutions Integrated questions and suggested solutions Suggested solution to compulsory assignment 01 Suggested solution to compulsory assignment 02
PLEASE NOTE: If any additional tutorial letters, except the above-mentioned, are posted to you, an announcement to inform you thereof will be made via myUnisa.
3
PURPOSE OF AND OUTCOMES FOR THE MODULE
3.1
Purpose
The purpose of this module is to provide learners with knowledge and skills to enable them to prepare a set of financial statements of companies in accordance with International Financial Reporting Standards with specific reference to: • • •
Property, plant and equipment (IAS 16) Investment property (IAS 40) Impairment of assets (IAS 36) 5
• • •
Intangible assets (IAS 38) Non-current assets held for sale and discontinued operations (IFRS 5) Financial Instruments: Presentation, Recognition and Measurement (IFRS 9; IAS 32 & IAS 39) The effects of changes in foreign exchange rates (IFRS 7; IAS 21 & IFRS 9)
• 3.2
Outcomes
Learning outcome 1 • Account for property, plant and equipment, and depreciation in the financial statements of an entity in terms of the requirements of IFRS. • Account for revaluations of property, plant and equipment in the financial statements of and entity in terms of the requirements of IFRS. • Account for deferred tax and tax implications in respect of property, plant and equipment. Learning outcome 2 • Account for investment property in the financial statements of an entity in terms of the requirements of IFRS. Learning outcome 3 • Identify and calculate the impairment of assets and business units. • Properly disclose such impairment in the financial statements of the entity in terms of the requirements of IFRS. Learning outcome 4 • • • •
Correctly account for intangible assets. Identify intangible assets on the basis of certain required criteria. Measure the carrying amount of intangible assets. Disclose intangible assets in terms of IFRS.
Learning outcome 5 • Account for non-current assets held for sale or disposal groups in the financial statements of an entity in accordance with the requirements of IFRS. • Account for discontinued operations in the financial statements of an entity in accordance with the requirements of IFRS. Learning outcome 6 • Describe financial instruments and how they should be treated in the financial statements of an entity in terms of the requirements of IFRS. • Apply the theory practically in questions. Learning outcome 7 • Calculate, journalise and disclose all aspects of the effects of changes in foreign exchange rates in terms of the requirement of IFRS. 6
FAC3702/101
4
LECTURERS AND CONTACT DETAILS
4.1
Lecturers
You may contact your lecturers by post, e-mail, telephone or on myUnisa. Lecturers
Office number
Mrs M Evans Mr M Mokgobinyane Mrs M Els Mrs F Jaffer Mrs B Nel
AJH 2-55 AJH 2-57 AJH 2-58 AJH 2-43 AJH 2-43
Personal Appointment Please make an appointment, in advance, with your lecturer should you wish to see them personally with specific problem areas in your studies. Lecturers are available from 07:45 to 16:00 on weekdays. Telephonic enquiries You can contact your lecturers telephonically, by making use of the course contact number provided below. An available lecturer will take your call and assist you as promptly as they can. The course telephone number is:
(012) 429 4268
E-mail You can also communicate with the lecturers via e-mail. Please make use of the following email address which is specific to the FAC3702 module to ensure a prompt reply: Semester 1
[email protected]
Semester 2
[email protected]
Due to the high volumes of emails received by lecturers from students it is not always possible to reply to these emails immediately. Please be patient as your emails will be attended to as soon as possible. myUnisa You can also communicate with the lecturers via myUnisa. Online address: http://my.unisa.ac.za Postal Address: Name of lecturer University of South Africa P O Box 392 Unisa 0003 7
4.2
Department
The Department of Financial Accounting is situated on the main campus on the second floor of the AJH van der Walt Building. Department of Financial Accounting contact numbers: • Telephone: (012) 429 4459 (departmental secretary). • Fax: (012) 429 3335 (marked for a specific lecturer’s attention). Ensure that your student number, return address and telephone numbers are included with your enquiries. Always have your student number at hand when contacting the University. 4.3
University
You can contact Unisa as follows: Unisa website (http://www.unisa.ac.za & http://mobi.unisa.ac.za) All study-related information is now available on the new Unisa corporate website in both web and mobi formats. myUnisa(https://my.unisa.ac.za/portal & https://my.unisa.ac.za/portal/pda) Students can access their own information via the myUnisa website or mobi site. E-mail (
[email protected]) Students may send an e-mail to
[email protected] for information on how to contact Unisa via e-mail. SMS (32695 - only for students in South Africa) Students may send an SMS to 32695 for more information on how to contact Unisa via SMS. The sender will receive an auto response SMS with the various SMS options. The cost to the student per SMS is R1,00. Fax ((012) 429 4150) Students will be able to fax their enquiries to (012) 429 4150, whereafter it will be distributed to and processed by the relevant department. Postal Address Name of lecturer University of South Africa P O Box 392 Unisa 0003 College Information Coordinator Portia Ngcobo Telephone enquiries: (012) 429 3925; e-mail:
[email protected] Students can find general Unisa contact details in the myStudies@Unisa brochure. Always have your student number at hand when contacting the University. 8
FAC3702/10 F 01
5
MO ODULE-R RELATED D RESOU URCES
5 5.1
Pres scribed bo ooks The study material T m ass such are not exhaustive for pu urposes off tuition, an nd itt is essential that you have at a your dissposal the e following g prescribe ed b book:
K Koppescha aar, ZR, et al 2013.De escriptive e Accountiing. 18th ed. e LexisNe exis: Durba an. Please reffer to the list l of official bookse ellers and their t addre esses in the myStud dies@Unis sa brochure. Prescribed d books ca an be obtaiined from the t Univers sity’s official bookselllers. Shou uld you havve any difficu ulties obtaining bookks from the e official bo ooksellers, please ccontact the e Prescribe ed Book Secction as soon s as possible at telepho one numb ber (012) 429-4152 2 or e-ma ail vospresc@ @unisa.ac..za STUDENT TS ARE REQUIR RED TO CALCULA ATOR FOR R THIS MO ODULE. 5 5.2
USE
A
NON-PR ROGRAMM MABLE
FINANCIA F AL
Reco ommende ed books
T There are no n recomm mended boo oks for thiss module. 5 5.3
Elec ctronic Res serves (e--Reserves s)
T There are no n electron nic reserves for this module. m
6
STU UDENT SUPPOR S RT SERVIICES FO OR THE MODULE M
Im mportant in nformation appears in your my yStudies@ @Unisa brochure. 6 6.1
Tuto or assistan nce
Students who S w are inte erested in tutor assisstance can obtain the e telephone e numbers s and detaiils frrom the lea arning centtres. REGION: PHYSICA AL ADDRESS
POLOKW WANE 23A Landrros Mare Street S Polokwane e, 0742
CON NTACT SER RVICES NORTH H-EASTER RN
DETAIL LS:
TUTORIAL T L
(0 015) 290-3 3443 Also o Giyani an nd Makhado
NELSPRU UIT Standard Bank B Centtre: 1st Flo oor 31 Brown Street Nelspruit, 1201 MIDDLEB BURG
(013) 755-2 2476
9
REGION: PHYSICAL ADDRESS Cnr Church & Bhimy Damane Str Town Square Building Ground Floor Middleburg, 1050
CONTACT DETAILS: SERVICES (013) 282-4115
GAUTENG THUTONG (Sunnyside) Cnr Walker & Joubert Streets (012) 441-5792/5794/5796 Sunnyside, 0002 JOHANNESBURG Tutorial Services Office (011) 630-4512/4504/4514 29 Rissik Street Bram-Fischer Building Johannesburg, 2001 FLORIDA Tutorial Services Office (011) 471-2082 Cnr Christiaan de Wet &Pioneer Ave. (011) 471-2298 F-Block Room 5-20 Florida BENONI Unisa Ekurhuleni Regional Service Centre (011) 845-9306/00 Cnr. R51 & Brazil Streets, Daveyton VAAL Hangar Building 1st floor 016 455 6300 Cnr Rhodes & Voortrekker streets Vereeniging, 1939 KWA-ZULU NATAL DURBAN Tutorial Services Office (031) 335 8110/11/27/30/31 Rooms 305/505/605 Durban Learning Centre 221 Dr Pixley kaSeme (West) Street Durban, 4001 Tutorial Services Office Room1B5, Ground floor 230 Stalwart Simelane(Stanger) Street Durban, 4001 RICHARDS BAY Tutorial Services Office Lot 100637 Block C, Via Verbana Veldenvlei Richards Bay, 3900
10
(031) 335 1749/50/51
(035) 789 3501/8405
TUTORIAL
FAC3702/101
WILD COAST (MBIZANA) Tutorial Services Office Cnr Wild Coast Sun Main Road Mzamba Beach, Bizana PIETERMARITZBURG Tutorial Services Office Reid Building (room 204/205/206) 1 LangalibaleleStr Pietermaritzburg, 3201 NEWCASTLE Tutorial Services Office Cnr Sutherland & Harding Str Newcastle, 2940
(039) 305 6433
(033) 355-1734 (033) 355-1735
(031) 335 8127 (034) 326 3105 CAPE COASTAL
PAROW Tutorial Services Office 15 Jean Simonis Street Parow, 7499 GEORGE Tutorial Services Office Joubert Plaza 1 100 Meade Street George, 6530 MTHATHA Tutorial Services Office 32 Cnr Victoria & York Rd Economic Affairs Building Umtata, 5100 EAST LONDON Tutorial Services Office 10 St Lukes Road Southernwood East London, 5201 PORT ELIZABETH Tutorial Services Office Cnr Greyville & Ring Roads Green Acres Port Elizabeth, 6045
(021) 936-4190/4154
(044) 884 1300
(047) 531-5002/3/6/7 also Lusikisiki and Mt Frere
(043) 743-9246 also King Williams Queenstown
Town,
Butterworth,
(041) 363 1070
MIDLANDS MAFIKENG Tutorial Services Office 29 Main Street Opposite ABSA Bank, Mafikeng Mafikeng, 2745
(018) 381-6617/7318
11
RUSTENBURG Tutorial Services Office Forum Building (1st Floor) Cnr. OR Tambo & Steen Street Rustenburg, 0300 POTCHEFSTROOM Tutorial Services Office 20 Auret Street Potchefstroom, 2531 KIMBERLEY Tutorial Services Office NIHE Main Campus Cnr Chapel & Eureka Streets Kimberley, 8301 BLOEMFONTEIN Tutorial Services Office NRE House 161 Zastron Street Bloemfontein, 9301 KROONSTAD Tutorial Services Office NFS Building 1st floor 36 Brand Street Kroonstad, 9499 6.2
(014) 594 8800/8856
(018) 294 3362/3341
(053) 832 6391/7083
(051) 411-0452
(056) 213-2053/4
Contact with fellow students
6.2.1 Study groups Many students have found that they benefit immensely from joining a study group consisting of students that are enrolled for the same module(s). It is advisable to have contact with fellow students. One way to do this is to form study groups. The addresses of students in your area may be obtained from the following department Directorate: Student Administration and Registration PO Box 392 UNISA 0003 6.2.2 myUnisa If you have access to a computer that is linked to the internet, you can quickly access resources and information at the university. The myUnisa learning management system is Unisa's online campus that will help you to communicate with your lecturers, with other students and with the administrative departments of Unisa – all through the computer and the internet. To go to the myUnisa website, start at the main Unisa website, http://www.unisa.ac.za, and then click on the “Login to myUnisa” link on the right-hand side of the screen. This should take you to the myUnisa website. You can also go there directly by typing in http://my.unisa.ac.za. 12
FAC3702/101
Please consult the publication myStudies@Unisa, for more information on myUnisa. 6.2.3 Group discussions There will be NO group discussions for this module. 6.3
Unisa Library services information
6.3.1 Unisa Library login You will be required to provide your login details, i.e. your student number and your myUnisa password, in order to access the library’s online resources and services. This will enable you to: • • • •
View or print your electronic course material Request library material View and renew your library material Use the library’s e-resources
6.3.2 Requesting books from the library Students are expected to purchase their own copies of prescribed books. A limited number of copies are housed in the Unisa Libraries, subject to each branch library’s lending regulations. Problems experienced in obtaining copies from booksellers should be directed to the Prescribed Book section at email
[email protected] or telephone +27 12 429 4152. 6.3.3 Electronic requests The preferred way of requesting recommended or additional books is online via the library’s catalogue. Go to http://oasis.unisa.ac.za or via myUnisa, go to http://my.unisa.ac.za > Login > Library > Library catalogue, or for mobile access (AirPAC), go to http://oasis.unisa.ac.za/airpac 6.3.4 Telephonic book requests This can be done on +27 12 429 3133. Please supply the reservation order number (RON). 6.3.5 Postal requests Books may also be requested by completing a library book request card for each book. These should be mailed to: The Head: Request Services Department of Library Services PO Box 392 Pretoria 0003 or faxed to +27 12 429 8128. Enquiries about requested books should be addressed to
[email protected]. Note requests should not be sent to this email address. Telephonic enquiries can be made at +27 12 429 3133/3134. An after-hour voicemail service is also available at these numbers.
13
7
MODULE-SPECIFIC STUDY PLAN
7.1
Study programme
Use your myStudies@Unisa brochure for general time management and planning skills. Experience has shown that students often fail to plan their studies properly so as to achieve specific study goals at predetermined dates. This leads to a haphazard approach to their studies and the use of ineffective study techniques. We assume the following: Studies should commence in January (first semester) and July (second semester) and that the full module should be completed by approximately the end of April (first semester) and August (second semester). This will leave sufficient time for revision. NB: Those of you who register late should endeavour to put in extra effort in order to make up the lost time. The table that follows can be used as a guideline on how to plan your study for FAC3702. If you submit your assignment online, submit it on or before the closing date, allowing you additional study time.
SEMESTER 1
The following table is a suggested study programme for completing the syllabus for this module: Week Learning commences Week Assignment no Due date unit on Property, plant and equipment 20 January 1-2 3-4
Investment property
3 February
5
Impairment of assets
10 February
6-7
Intangible assets
17 February
8-9
Non-current assets held for sale and discontinued operations
3 March
Financial instruments: Presentation, Recognition and Measurement The effects of changes in foreign exchange rates Revision of all learning units
17 March
10 - 11 12 - 13 14 - 15
14
31 March 14 April
01
19 February
02
2 April
FAC3702/10 F 01
SE EMESTER 2
The followiing table iis a sugge T ested stud dy program mme for ccompleting the syllab bus for th his m module: L Learning Wee ek Week Assignment no Due date e comme ences unit P Property, pllant and eq quipment 30 Ju une 1-2 3-4
In nvestment property
14 Ju uly
5
Im mpairmentt of assets
28 Ju uly
6-7
ntangible assets a In
4 Aug gust
8-9
Non-current assets he N eld for s sale and disscontinued d o operations
18 Aug gust
1 - 11 10 1 - 13 12 1 - 15 14
01
13 August
02
15 5 Septembe er
Financial in F nstruments: 1 Septe ember P Presentatio on, Recogn nition and M Measureme ent T effects of change The es in 15 Septe ember fo oreign exch hange rate es ember R Revision o all learn of ning units 29 Septe
We feel tha W at at this po oint a word d of warnin ng would not n be amiss. Please e do not allow yourse elf to o get behin nd with you ur study prrogramme. Regaining g of lost tim me is seldo om achieve ed. 7 7.2
Sugg gested stu udy appro oach Firstlyy work thro ough the re elevant sec ctions of tu utorial letter 501 perta aining to th he assignment to be attemp pted. Ensure that you u understtand the work w and do d the examples e o your ow on wn, withou ut looking at the ansswers. Compare you ur answer to the one in th he guide and a pinpoint where you made e mistakes. Restu udy the re elevant se ection and d ensure that you now unde erstand th he solution to the e example e. If you still s do no ot understtand, write e the pag ge refere ence and the problem m on your “queries “ lisst” so that you can phone one of o the le ecturers forr an explan nation.
Before atte B empting an assignm ment, ensu ure that you y have prepared the work k up to an a e examination n standarrd. Only thereafter t r should you y attem mpt answe ering the assignment q questions u under exam mination co onditions, i.e. i in the time t allowe ed and sitttings of two o hours at a time. The assign T nment musst in effect constitute e your firstt revision of o the stud dy materia al which yo ou h have studie ed. In oth her words, the assignment sho ould not se erve as a checklist of the work 1 15
required to be studied for the completion of the assignment, but should, when the assignment is attempted, serve as a test of the knowledge that you have acquired by studying the work. Take the suggested solution and compare your attempt in the time allowed to the solution and determine the differences. In respect of every error, determine why the error was made i.e. careless reading of the question, lack of knowledge, question not answered, carelessness in the answering of the question, unable to complete the question due to time, calculations not shown, etc. You have now revised the work for a second time and you have been exposed to the type of errors that you are prone to make and can therefore work on correcting them. If you persevere with this proposed approach to studying this module, you will reap the benefit of sustained practice in answering questions and will undoubtedly enjoy success in the examination.
8
MODULE PRACTICAL WORK AND WORK-INTEGRATED LEARNING
There are no practicals for this module.
9
ASSESSMENT
9.1
Assessment plan
The Management of the University has taken a decision to introduce compulsory assignments to be submitted in all modules by set due dates. Submission of compulsory assignment 01 by its due date will give a student admission to the examination in the particular module and the marks obtained for both compulsory assignments 01 and 02 will contribute towards the final mark for that module. Please note that the assignment questions for the first and second semester are different and the assignments have different unique numbers. Students require a final mark of 50% to pass a module. This final mark is calculated as follows: (10% x mark obtained for both compulsory assignments) + (90% x mark obtained in the examination)
Example:
Student 1 Student 2 Student 3 Student 4 Student 5 Student 6 Student 7
Assignment mark (assignment 01 and assignment 02)
Contribution to final mark at 10%
100% 70% 50% 30% 20% 10% 0%
10% 7% 5% 3% 2% 1% 0%
Exam mark contribution required to pass (50% minus assignment mark contribution) 40% 43% 45% 47% 48% 49% 50%
Minimum exam mark required to pass 45% 48% 50% 52% 53% 54% 56%
Please ensure that the compulsory assignments reaches the University before the due date late submission of the assignments will result in you not being admitted to the examination. 16
FAC3702/101
Please refer to section 9.2.2 of this tutorial letter for the due dates. Sub minimum requirements A sub minimum of 40% in the examination is required. Paragraph 5.4 of the Assessment Policy provides that the final mark of a student is a combination of the year mark and the examination mark, in the ratio as explained above. In case where a student does not obtain the required sub minimum of 40% in the examination, the year mark does not count. The final mark then is the examination mark obtained. Results of supplementary examination: In terms of paragraph 5.7 of the Assessment Policy the year mark which was previously obtained, will contribute to the final mark of students writing supplementary examinations. 9.2
General assignment numbers
Assignments are numbered consecutively per module, starting from 01. 9.2.1 Unique assignment numbers Each assignment has its own unique assignment number. The following are the unique assignment numbers: SEMESTER 1 Assignment Type Unique number Assignment 1 Written 811042 Assignment 2 MCQ 504754
Assignment Assignment 1 Assignment 2
SEMESTER 2 Type Unique number Written 504775 MCQ 504816
9.2.2 Due dates for assignments SUBMISSION OF ASSIGNMENT 01 IS COMPULSORY TO OBTAIN EXAMINATION ADMISSION. ASSIGNMENT 01 AND ASSIGNMENT 02 TOGETHER WILL COUNT 10% TOWARDS YOUR FINAL MARK FOR THIS MODULE. Unique Number
Due date
Compulsory 01/2014 – FIRST SEMESTER
811042
19 February 2014
Compulsory 02/2014 – FIRST SEMESTER
504754
2 April 2014
Compulsory 01/2014 – SECOND SEMESTER
504775
13 August 2014
Compulsory 02/2014 – SECOND SEMESTER
504816
15 September 2014
Assignment number
17
9.2.3 Finality of due dates The receipt of assignments after the due date disrupts our marking programme and as the uncontrolled submission of assignments furthermore creates administrative problems no extension will be granted for the submission of assignments. IMPORTANT: IF THE COMPULSORY ASSIGNMENTS (ASSIGNMENT 01 AND 02) ARE RECEIVED AFTER THE DUE DATE, YOU WILL NOT GET ADMISSION TO THE EXAMINATION. 9.3
Submission of assignments
(a) Students may submit written assignments and MCQ assignments either by post or Mobile MCQ submission or electronically via myUnisa, but preferably via myUnisa. Assignments may not be submitted by fax or e-mail. (b) For detailed information on assignments please refer to the myStudies@Unisa brochure. To submit an assignment via myUnisa: • • • • • •
Go to myUnisa. Log in with your student number and password. Select the module. Click on “Assignments” in the menu on the left-hand side of the screen. Click on the assignment number you wish to submit. Follow the instructions.
(c) Assignments received after the due date will not be marked. PLEASE NOTE: It is important that you keep a copy of your submitted assignment as well as the submission reference number, to facilitate enquiries at a later date.
9.4
Assignments
Assignments, self-assessment and additional questions form an integral part of the tutorial matter and must also be studied for examination purposes. It is in your own interest to complete both assignments and additional questions as: • • •
the assignments provide practice which is essential in your study of accounting; valuable revision material is contained in the assignments; and the type of questions in the assignments are usually representative of the type of questions which you can expect in the examination.
Please note that it is not possible to cover every aspect of the study material in the assignments. 9.5
Plagiarism
Plagiarism is the act of taking words, ideas and thought of others and passing them off as your own. It is a form of theft which involves a number of dishonest academic activities. 18
FAC3702/101
The disciplinary code for students is given to all students at registration. Students are advised to study the code. Kindly read the University Policy on Copyright Infringement and Plagiarism as well.
10
OTHER ASSESSMENT METHODS
No other assessment methods are currently used for this module.
11
EXAMINATION
Use your myStudies@Unisa brochure for general examination guidelines and examination preparation guidelines. It should be mentioned that you will write a two hour examination for this module in May/June (first semester) or October/November (second semester). 11.1
Examination admission SUBMISSION OF ASSIGNMENT 01 IS COMPULSORY TO OBTAIN EXAMINATION ADMISSION. ASSIGNMENT 01 AND ASSIGNMENT 02 TOGETHER WILL COUNT 10% TOWARDS YOUR FINAL MARK FOR THIS MODULE. ONLY STUDENTS THAT COMPLY WITH THE REQUIREMENTS WILL BE ADMITTED TO THE EXAMINATION OF FAC3702.
Please note: The compulsory assignments (assignment 01 and 02) count 10% towards your final mark. The mark obtained by you in the examination will determine the remaining 90% of your final mark for this module. 11.2
Examination period
This module is offered in a semester period of fifteen weeks. This means that if you are registered for the first semester, you will write the examination in May/June 2014 and the supplementary examination will be written in October/November 2014. If you are registered for the second semester you will write the examination in October/November 2014 and the supplementary examination will be written in May/June 2015. During the module of the semester, the Examination Section will provide you with information regarding the examination in general, examination venues, examination dates and examination times. 11.3
Previous examination papers
The University Rules (paragraph 32) have been amended to specifically provide that the University will not make previous years examination papers and memorandums and so-called “model answers” available to students. 11.4
Information on the examination
To help you in your preparation for the examination, the lecturers will make available, information that will explain the format of the examination paper and general advice the lecturers want to share with students.
19
12
FREQUENTLY ASKED QUESTIONS
The myStudies@Unisa brochure contains an A-Z guide of the most relevant study information.
13
SOURCES CONSULTED
None.
14
CONCLUSION
We would like to encourage you to approach your studies with enthusiasm. Remember, success can only be achieved by hard work and perseverance. We wish you a pleasant study period. ANNEXURE A:
COMPULSORY ASSIGNMENT 01 (WRITTEN) - FIRST SEMESTER
ANNEXURE B:
COMPULSORY ASSIGNMENT 02 (MCQ) - FIRST SEMESTER
ANNEXURE C:
COMPULSORY ASSIGNMENT 01 (WRITTEN) - SECOND SEMESTER
ANNEXURE D:
COMPULSORY ASSIGNMENT 02 (MCQ) - SECOND SEMESTER
20
FAC3702/101
ANNEXURE A: ASSIGNMENT 01 FOR FAC3702 (COMPULSORY FOR FIRST SEMESTER REGISTRATION) SUBMISSION OF ASSIGNMENT 01 IS COMPULSORY TO OBTAIN EXAMINATION ADMISSION. ASSIGNMENT 01 TOGETHER WITH ASSIGNMENT 02 COUNT 10% TOWARDS YOUR FINAL MARK. SEMESTER 1 UNIQUE NUMBER:
811042
DUE DATE: 19 FEBRUARY 2014 PLEASE NOTE: 1. This assignment consists of only one (1) question with subsections. 2. All subsections of this question must be answered. 3. All calculations must be shown. 4. Please follow the instructions in the required part of the question carefully to ensure that you obtain the maximum marks for the subsection of the question. 5. This assignment covers learning unit 1 - 2 of the tutorial letter 501. Work carefully through the relevant tutorial matter before you attempt the assignment. 6. No extension will be granted for the late submission of this assignment and no correspondence or telephone conversations will be conducted in this regard. 7. Please follow the instructions for the submission of the written assignment carefully. INSTRUCTIONS FOR SUBMISSION OF WRITTEN ASSIGNMENTS Written assignments can either be submitted as follows: • mailed by using ordinary post using the envelope supplied; or • placed in the assignment envelope in a UNISA assignment post box; or • electronically submitted via myUnisa. ¾
THE PREFERRED METHOD OF SUBMISSION IS ELECTRONICALLY VIA MYUNISA.
PLEASE NOTE: If you electronically submit the written assignment via myUnisa the file must be converted to or scanned in PDF-format. The assignment must be scanned and submitted as only one PDF file. A coversheet consisting of your name, student number, postal address, module code and assignment number must be completed and included in the scanned document. Please ensure that you do not only submit a coversheet, you must also attach your assignment. Any format other than PDF or more than one scanned PDF file will not be accepted and will also be returned unmarked. 21
ASSIGNMENT 01 (first semester) (continued) WRITTEN ASSIGNMENT Steelcor Ltd is a steel manufacturing company, situated in Benoni, Gauteng. The company has a 31 December year end. The following details relate to the assets of Steelcor Ltd: Machine On 1 July 2012 Steelcor Ltd purchased a machine for an amount of R500 000, including inspection costs of R60 000. The machine was available for use, as intended by management, on acquisition date. The machine must be inspected every 3 years in order to comply with safety regulations. Due to unforeseen circumstances, Steelcor Ltd had to inspect the machine on 31 December 2013 and incurred inspection costs amounting to R75 000. A residual value of Rnil was allocated to the machine and it is estimated that the machine will produce 600 000 units during its useful life. For the 2012 and 2013 financial years the machine produced 15 000 units and 45 000 units respectively. Delivery vehicle On 1 April 2013 Steelcor Ltd purchased a second-hand delivery vehicle for an invoice amount of R150 000. A special arrangement was made with the seller to defer payment until 30 June 2013. On acquisition date the vehicle was available for use, as intended by management. On acquisition date it was estimated that the vehicle had an expected useful life of 5 years and a residual value of Rnil was allocated to the vehicle. Administration building Steelcor Ltd owns an administration building that was initially held as an investment property on acquisition. The property was purchased on 1 January 2009 at a cost of R2 400 000 (Land: R700 000; Building: R1 700 000). During the 2012 financial year Steelcor Ltd decided to rather occupy the administration building themselves instead of renting it out and subsequently took occupation of the administration building on 30 April 2012. On 30 April 2012 it was estimated that the building had a remaining useful life of 30 years and a residual value of R500 000 was allocated to the building. The fair values and net replacement values of the administration property on the respective dates were as follows: Land Building Total R R R 30 April 2012 900 000 2 300 000 3 200 000 31 December 2013 750 000 2 150 000 2 900 000
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FAC3702/101
ASSIGNMENT 01 (first semester) (continued) Additional information 1. An extract from the accounting policy of Steelcor Ltd is as follows: • Owner-occupied land and buildings are accounted for according to the revaluation model and machinery and vehicles are accounted for according to the cost model. On revaluation, accumulated depreciation is eliminated against the gross carrying amount of the asset. • Investment property is accounted for according to the fair value model. The carrying amount of investment property will be recovered through sale of the property. • Depreciation on buildings and vehicles are provided according to the straight-line method and depreciation on machinery is provided according to the units of production method. Depreciation will be provided on the most recent revalued amounts. The remaining useful lives and residual values of the assets remained unchanged throughout the period. • Any revaluation surplus is realised on sale of the underlying asset. 2. All the net replacement values and fair values were determined by Mr Shavimba, an independent sworn appraiser. These values were determined with reference to current market prices, on an arm’s length basis, of similar properties in the same area. 3. The South African normal tax rate is 28%. 66,6% of capital gains are taxable. 4. The South African Revenue Service allows the following capital allowances: • No tax allowance on administration buildings. • A tax allowance on machinery according to the straight-line method over 5 years, not proportioned for part of the year. • A tax allowance on the delivery vehicle according to the straight-line method over 4 years, not proportioned for part of the year. 5. Deferred tax is provided for on all temporary differences using the statement of financial position approach. There are no other temporary differences except those mentioned in the question. The company will have sufficient taxable profit in future against which any unused tax losses can be utilised. 6. Assume that the inspection costs are significant and regarded as a separate component of the machine. Major inspection costs are written off for taxation purposes when the costs are actually incurred. 7. The applicable pre-tax discount rate is 12%. 8. Assume that land and buildings are regarded as separate asset classes and that all amounts are material.
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ASSIGNMENT 01 (first semester) (continued) REQUIRED: 1. Prepare the property, plant and equipment note to the annual financial statements of Steelcor Ltd for the year ended 31 December 2013. (26½) Your answer must comply with the requirements of International Financial Reporting Standards. Please note: • • • • • •
Accounting policy notes are not required. Show all your data input in your financial calculator. Round all amounts to the nearest Rand. Show all calculations. Ignore comparative information. Ignore any VAT implications.
2. Calculate the deferred tax balance in the statement of financial position of Steelcor Ltd on 31 December 2013, relating to only the administration property, using only the statement of financial position approach. (3½) Your answer must comply with the requirements of International Financial Reporting Standards. Please note: • Round all amounts to the nearest Rand. • Show all calculations.
Please note: For all the capital gains tax calculations use 28% x 66,6% to ensure that rounding does not affect your answer. Do not round the CGT rate.
24
FAC3702/101
ANNEXURE B: ASSIGNMENT 02 FOR FAC3702 (COMPULSORY FOR FIRST SEMESTER REGISTRATION) ASSIGNMENT 01 TOGETHER WITH ASSIGNMENT 02 COUNT 10% TOWARDS YOUR FINAL MARK. SEMESTER 1 UNIQUE NUMBER: 504754 DUE DATE: 2 APRIL 2014 PLEASE NOTE: 1. This assignment consists of 10 multiple choice questions. 2. This assignment covers learning unit 1 to 4 of tutorial letter 501. Work carefully through the relevant tutorial matter before attempt the assignment. 3. No extension will be granted for the late submission of this assignment and no correspondence or telephone conversations will be conducted in this regard. 4. It is preferred that the assignment is submitted via myUnisa. INSTRUCTIONS FOR SUBMISSION ON MARK-READING SHEETS: Only mark-reading sheets provided may be used. Colour in the correct block with a HB pencil. Fill in your student number correctly. Fill in the assignment number correctly Fill in the unique number of the assignment for the specific module and semester correctly. Every assignment which is marked by the computer is given a unique number. The number contains information on the module code and assignment number. When the computer reads the mark-reading sheet with, say, the unique number 103039, it “knows” that it is Assignment 01 for that specific module. Answer each numbered question at the relevant answer number. Send only your mark-reading sheet to the Assignment Section in the appropriate envelope. DO NOT: Make more than one mark per question; tear or fold the mark-reading sheet; staple the mark reading sheet to another piece of paper; colour outside the block; colour in the block with a pen; make corrections with Tippex; submit answers on written sheet of paper, or try to repair a torn mark-reading sheet with sticky tape - use another one.
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ASSIGNMENT 02 (first semester) (continued) MULTIPLE CHOICE QUESTION ASSIGNMENT Motorlink Ltd is a motor manufacturing company based in Durban, Kwazulu-Natal. company has a 31 December year end.
The
The following information relates to the assets of the company: Manufacturing plant On 1 May 2007 Motorlink Ltd purchased a property to be used as the manufacturing plant of the company for R3 450 000 (Land: R1 200 000; Building: R2 250 000). The property was available for use, as intended by management, on acquisition date. On acquisition date a useful life of 25 years and an estimated residual value of R750 000 was allocated to the building. During the current financial year the directors of Motorlink Ltd decided to account for land and buildings at their respective net replacement values. The net replacement value of the property on 31 December 2013 was estimated to be R3 450 000 (Land: R1 300 000; Building: R2 150 000). On the date of revaluation the remaining useful life of the building was estimated to be only 16 years. The residual value of the building remained unchanged. Property – La Lucia On 1 April 2012 Motorlink Ltd purchased a property for R2 600 000 (Land: R1 000 000; Building: R1 600 000), with the intention to earn rental income from it. A suitable tenant was found and the rental agreement, effective from 1 July 2013, for a rental of R30 000 per month was signed. The fair values of the property, on the respective dates, were as follows: Land Building R R 31 December 2012 1 100 000 1 650 000 31 December 2013 1 150 000 1 850 000
Total R 2 750 000 3 000 000
Patent On 1 June 2010 Motorlink Ltd purchased a patent to manufacture a range of more fuel efficient motor vehicles for R780 000. The patent was available for use, as intended by management, on acquisition date. The patent has an estimated useful life of 6 years and a residual value of Rnil. In 2012 Motorlink Ltd’s biggest competitor launched a new range of faster and more fuel efficient motor vehicles, which were very popular among customers due to the significant fuel savings. On 31 December 2012 the fair value less costs to sell of the patent was estimated to be R420 000. The future net cash flows from the patent, for the next three years, is estimated at R195 000, R178 000 and R143 000 respectively. The pre-tax discount rate is 10,5% per annum.
26
FAC3702/101
ASSIGNMENT 02 (first semester) (continued) In 2013 Motorlink Ltd’s biggest competitor filed for bankruptcy which lead to an increase in the value in use, as well as in the fair value of Motorlink Ltd’s patent. On 31 December 2013 the fair value less costs to sell and the value in use of the patent were determined to be R378 000 and R370 000 respectively. Additional information 1. An extract of the accounting policy of Motorlink Ltd is as follows: • Owner-occupied land and buildings are accounted for according to the revaluation model. On revaluation, accumulated depreciation is eliminated against the gross carrying amount of the asset. • Investment property is accounted for according to the fair value model. The carrying amount of investment property will be recovered through sale of the property. • Intangible assets are accounted for according to the cost model. • Depreciation and amortisation are provided for according to the straight-line method. Depreciation will be provided on the most recent revalued amounts. • Any revaluation surplus is realised through use of the assets. 2. Deferred tax is provided for on all temporary differences using the statement of financial position approach. There are no other temporary differences except those mentioned in the question. The company will have sufficient taxable profit in future against which any unused tax losses can be utilised. 3. All the net replacement values and fair values were determined by Mr Smith, an independent sworn appraiser. These values were determined with reference to current market prices. 4. The South African Revenue Service allows the following capital allowances: • A building allowance according to the straight-line method over 20 years, not proportioned for a part of the year. • A tax allowance on the patent according to the straight-line method over 3 years, not proportioned for a part of the year. 5. The South African normal tax rate is 28%. 66,6% of all capital gains are taxable. 6. Assume all amounts are material to the annual financial statements. Please note: • Round all amounts to the nearest Rand. • Ignore any VAT implications.
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ASSIGNMENT 02 (first semester) (continued) MULTIPLE CHOICE QUESTIONS: Questions 1 - 10 relate to the annual financial statements of Motorlink Ltd for the year ended 31 December 2013, that complies with the requirements of International Financial Reporting Standards. Each question has only one correct answer. Please note: For all the capital gains tax calculations use 28% x 66,6% to ensure that rounding does not affect your answer. Do not round the CGT rate. QUESTION 1: The revaluation of the land and buildings of the manufacturing plant should be disclosed in the annual financial statements of Motorlink Ltd for the year ended 31 December 2013, as follows: (1) (2) (3) (4) (5)
Revaluation surplus of R427 500 (Land: R100 000; Buildings: R327 500) Fair value adjustment of R340 000 (Land: R100 000; Buildings: R240 000) Fair value adjustment of R427 500 (Land: R100 000; Buildings: R327 500) Revaluation surplus of R340 000 (Land: R100 000; Buildings: R240 000) Revaluation surplus of R408 235 (Land: R100 000; Buildings: R308 235) (2)
QUESTION 2: The manufacturing plant should be disclosed in the annual financial statements of Motorlink Ltd at year end on 31 December 2013, as follows: (1) (2) (3) (4) (5)
Investment property with a carrying Building: R2 150 000) Investment property with a carrying Building: R1 910 000) Property, plant and equipment with R1 300 000; Building: R2 237 500) Property, plant and equipment with R1 300 000; Building: R2 150 000) Property, plant and equipment with R1 200 000; Building: R1 910 000)
amount of R3 450 000 (Land: R1 300 000; amount of R3 110 000 (Land: R1 200 000; a carrying amount of R3 537 500 (Land: a carrying amount of R3 450 000 (Land: a carrying amount of R3 110 000 (Land: (2)
QUESTION 3: The deferred tax balance, relating to only the land of the manufacturing plant of Motorlink Ltd at year end on 31 December 2013, amounts to: (1) (2) (3) (4) (5)
R28 000 deferred tax liability R27 972 deferred tax liability R18 648 deferred tax liability R55 944 deferred tax liability R100 000 deferred tax liability (2)
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FAC3702/101
ASSIGNMENT 02 (first semester) (continued) QUESTION 4: The deferred tax balance, relating to only the building of the manufacturing plant of Motorlink Ltd at year end on 31 December 2013, amounts to: (1) (2) (3) (4) (5)
R86 306 deferred tax liability R106 194 deferred tax liability R46 620 deferred tax liability R128 205 deferred tax liability R192 500 deferred tax liability (2)
QUESTION 5: The property in La Lucia should be disclosed in the annual financial statements of Motorlink Ltd at year end on 31 December 2013, as follows: (1) (2) (3) (4) (5)
Property, plant and equipment with R1 150 000; Building: R1 850 000) Investment property with a carrying Building: R1 850 000) Property, plant and equipment with R1 100 000; Building: R1 650 000) Investment property with a carrying Building: R1 650 000) Investment property with a carrying Building: R1 600 000)
a carrying amount of R3 000 000 (Land: amount of R3 000 000 (Land: R1 150 000; a carrying amount of R2 750 000 (Land: amount of R2 750 000 (Land: R1 100 000; amount of R2 600 000 (Land: R1 000 000; (2)
QUESTION 6: The revaluation of the land and buildings of the property in La Lucia should be disclosed in the annual financial statements of Motorlink Ltd for the year ended 31 December 2013, as follows: (1) (2) (3) (4) (5)
Revaluation surplus of R250 000 (Land: R50 000; Building: R200 000) Fair value adjustment of R250 000 (Land: R50 000; Building: R200 000) Fair value adjustment of R150 000 (Land: R100 000; Building: R50 000) Revaluation surplus of R150 000 (Land: R100 000; Building: R50 000) Fair value adjustment of R427 500 (Land: R100 000; Building R327 500) (2)
QUESTION 7: The deferred tax balance, relating to only the property in La Lucia of Motorlink Ltd, at year end on 31 December 2013 amounts to: (1) (2) (3) (4) (5)
Deferred tax liability R112 000 (Land: R42 000; Building: R70 000) Deferred tax liability R32 648 (Land: R18 648; Building: R14 000) Deferred tax liability R27 972 (Land: R18 648; Building: R9 324) Deferred tax liability R97 972 (Land: R27 972; Building: R70 000) Deferred tax liability R74 592 (Land: R27 972; Building: R46 620) (2) 29
ASSIGNMENT 02 (first semester) (continued) QUESTION 8: The accumulated amortisation and impairment loss on the patent of Motorlink Ltd on 1 January 2013, amounts to: (1) (2) (3) (4) (5)
R351 764 R335 833 R15 931 R360 000 R465 833 (2)
QUESTION 9: When there is an indication that an impairment loss recognised for a particular asset in a prior financial year may no longer exist or may have decreased, the company will reverse the whole or a portion of the previously recognised impairment loss. The reversal of the impairment loss for a particular asset at year end is calculated according to International Financial Reporting Standards, as follows: (1)
The difference between the fair value less costs to sell and the value in use of that asset at year end. (2) The difference between the actual carrying amount at year end and what the carrying amount of that asset would have amounted to (net of amortisation or depreciation), if no impairment loss was recognised in the prior financial year (historical cost carrying amount), only if the historical cost carrying amount is lower than the recoverable amount of that asset. (3) The difference between the actual carrying amount at year end and what the carrying amount of that asset would have amounted to (net of amortisation or depreciation), if no impairment loss was recognised in the prior financial year (historical cost carrying amount), only if the historical cost carrying amount is higher than the recoverable amount of that asset. (4) The total of all impairment losses recognised for that particular asset in previous financial years, without any limitations. (5) The difference between the actual carrying amount at year end and the net replacement value of that asset at year end. (2) QUESTION 10: The recoverable amount of the patent of Motorlink Ltd at year end on 31 December 2013 amounts to: (1) (2) (3) (4) (5)
R8 000 R370 000 R378 000 R314 167 R302 899 (2)
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FAC3702/101
ANNEXURE C: ASSIGNMENT 01 FOR FAC3702 SEMESTER REGISTRATION)
(COMPULSORY
FOR
SECOND
SUBMISSION OF ASSIGNMENT 01 IS COMPULSORY TO OBTAIN EXAMINATION ADMISSION. ASSIGNMENT 01 TOGETHER WITH ASSIGNMENT 02 COUNT 10% TOWARDS YOUR FINAL MARK. SEMESTER 2 UNIQUE NUMBER:
504775
DUE DATE: 13 AUGUST 2014 PLEASE NOTE: 2. This assignment consists of only one (1) question with subsections. 2. All subsections of this question must be answered. 3. All calculations must be shown. 4. Please follow the instructions in the required part of the question carefully to ensure that you obtain the maximum marks for the subsection of the question. 5. This assignment covers learning unit 1 - 2 of tutorial letter 501. Work carefully through the relevant tutorial matter before you attempt the assignment. 6. No extension will be granted for the late submission of this assignment and no correspondence or telephone conversations will be conducted in this regard. 7. Please follow the instructions for the submission of the written assignment carefully. INSTRUCTIONS FOR SUBMISSION OF WRITTEN ASSIGNMENTS Written assignments can either be submitted as follows: • mailed by using ordinary post using the envelope supplied; or • placed in the assignment envelope in a UNISA assignment post box; or • electronically submitted via myUnisa. ¾ THE PREFERRED METHOD OF SUBMISSION IS ELECTRONICALLY VIA MYUNISA. PLEASE NOTE: If you electronically submit the written assignment via myUnisa the file must be converted to or scanned in PDF-format. The assignment must be scanned and submitted as only one PDF file. A coversheet consisting of your name, student number, postal address, module code and assignment number must be completed and included in the scanned document. Please ensure that you do not only submit a coversheet, you must also attach your assignment. Any format other than PDF or more than one scanned PDF file will not be accepted and will also be returned unmarked. 31
ASSIGNMENT 01 (second semester) (continued) WRITTEN ASSIGNMENT Fun & Games Ltd, the biggest wholesaler of toys in South Africa, is based in Gauteng. Fun & Games Ltd has a 30 June year end. The following information relates to the assets of the company: Property - Illovo Fun & Games Ltd owns a property, situated on erf 101, Illovo, which is used as their administration headoffice. The property was acquired on 1 July 2010 at a cost of R1 595 000 (Land: R750 000; Building: R845 000). The property was available for use, as intended by management, on acquisition date. The building has an expected useful life of 30 years and a residual value of R100 000. On 30 June 2013, the directors of Fun & Games Ltd revalued this property for the first time. The net replacement value of this property on 30 June 2013 was determined to be R2 100 000 (Land: R900 000; Building: R1 200 000). On the date of the revaluation the useful life and residual value of the building remained unchanged. Property – Cape Town On 1 November 2012, Fun & Games Ltd purchased a property in Cape Town for R2 195 000 (Land: R1 000 000; Building: R1 195 000). Fun & Games Ltd purchased this property with the intention to earn rental income from it. Significant renovations were done to the building to convert it into an office park. Construction costs incurred in respect of these renovations amounted to R750 000 and was completed on 15 January 2013. From 1 February 2013 the office park was leased out for R15 000 per month. Direct operating expenses relating to this office park amounted to R5 500 per month. The fair value of the property on 30 June 2013 was determined to be R4 550 000 (Land: R1 050 000; Building: R3 500 000). Motor vehicle The company purchased a motor vehicle on 1 July 2011 at a cost price of R250 000. The motor vehicle was available for use, as intended by management, on acquisition date. An estimated useful life of 5 years and a residual value of Rnil was allocated to the motor vehicle. On 30 June 2013 the fair value of the motor vehicle was determined to be R175 000. On 30 June 2013 the company entered into an exchange transaction with Sporty Ltd to exchange the motor vehicle for a delivery vehicle with a fair value of R178 000. The fair value of both vehicles can be readily determined, since an active market for similar used vehicles exists.
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FAC3702/101
ASSIGNMENT 01 (second semester) (continued) Additional information 1. It is company policy to apply the revaluation model to owner-occupied land and buildings and the cost model to vehicles. On revaluation, accumulated depreciation is eliminated against the gross carrying amount of the asset. Depreciation is calculated on the most recent revalued amounts and is provided according to the straight-line method over the asset’s estimated useful life. 2. It is company policy to account for investment property according to the fair value model. The carrying amount of the investment property will be recovered through sale. 3. The net replacement values and fair values of the properties were determined by Mr Monopoly, an independent sworn appraiser. The net replacement values and fair values of the properties were determined by reference to observable prices in an active market. 4. The South African Revenue Service does not grant a building allowance on any of the abovementioned buildings, but allows a tax allowance on vehicles over 5 years, according to the straight-line method. The South African Revenue Service will regard the renovation costs as of a capital nature. 5. Deferred tax is provided for using the statement of financial position approach. There are no other temporary differences except those mentioned in the question. There will be sufficient taxable income in future against which any unused tax losses can be utilised. 6. The South African normal tax rate is 28%. 66,6% of all capital gains are taxable. 7. It is the policy of the company to realise the revaluation surplus upon disposal of the asset. 8. Assume that land and buildings are regarded as separate asset classes and that all amounts are material. REQUIRED: 1. Prepare the following notes to the annual financial statements of Fun & Games Ltd for the year ended 30 June 2013: 1.1. Profit before tax 1.2. Property, plant and equipment 1.3. Investment property
(8½) (12) (2½)
Your answer must comply with the requirements of International Financial Reporting Standards.
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ASSIGNMENT 01 (second semester) (continued) Please note: • Accounting policy notes are not required. • Round all amounts to the nearest Rand. • Show all calculations. • Ignore comparative information. • Ignore any VAT implications. 2. Calculate the deferred tax balance in the statement of financial position of Fun & Games Ltd on 30 June 2013, relating to only the land and buildings, using only the statement of financial position approach. (8) Please note: • •
Round all amounts to the nearest Rand. Show all calculations.
Please note: For all the capital gains tax calculations use 28% x 66,6% to ensure that rounding does not affect your answer. Do not round the CGT rate.
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FAC3702/101
ANNEXURE D: ASSIGNMENT 02 FOR FAC3702 SEMESTER REGISTRATION)
(COMPULSORY
FOR
SECOND
ASSIGNMENT 01 TOGETHER WITH ASSIGNMENT 02 COUNT 10% TOWARDS YOUR FINAL MARK. SEMESTER 2 UNIQUE NUMBER: 504816 DUE DATE: 15 SEPTEMBER 2014 PLEASE NOTE: 1. This assignment consists of 10 multiple choice questions. 2. This assignment covers learning unit 1 to 4 of tutorial letter 501. Work carefully through the relevant tutorial matter before you attempt the assignment. 3. No extension will be granted for the late submission of this assignment and no correspondence or telephone conversations will be conducted in this regard. 4. It is preferred that the assignment is submitted via myUnisa. INSTRUCTIONS FOR SUBMISSION ON MARK-READING SHEETS: Only mark-reading sheets provided may be used. Colour in the correct block with a HB pencil. Fill in your student number correctly. Fill in the assignment number correctly Fill in the unique number of the assignment for the specific module and semester correctly. Every assignment which is marked by the computer is given a unique number. The number contains information on the module code and assignment number. When the computer reads the mark-reading sheet with, say, the unique number 103039, it “knows” that it is Assignment 01 for that specific module. Answer each numbered question at the relevant answer number. Send only your mark-reading sheet to the Assignment Section in the appropriate envelope. DO NOT: Make more than one mark per question; tear or fold the mark-reading sheet; staple the mark reading sheet to another piece of paper; colour outside the block; colour in the block with a pen; make corrections with Tippex; submit answers on written sheet of paper, or try to repair a torn mark-reading sheet with sticky tape - use another one.
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ASSIGNMENT 02 (second semester) (continued) MULTIPLE CHOICE QUESTION ASSIGNMENT Simply Foods Ltd is a food processing company situated in Gauteng, South Africa. The company has a 31 December year end. The following information relates to the assets of the company: Processing plant On 1 March 2010 Simply Foods Ltd purchased a property to be used for the processing and preparation of their product range for R1 200 000 (Land: R500 000; Building: R700 000). The property was available for use, as intended by management, on acquisition date. The building has an estimated useful life of 20 years and a residual value of R150 000 was allocated to the building. On 1 January 2013 the gross replacement value of the property was estimated to be R1 600 000 (Land: R750 000; Building: R850 000). The residual value and useful life of the building remained unchanged throughout the period. Erf 88 – Sandton On 1 July 2013 Simply Foods Ltd purchased vacant land for R700 000. The company has not yet determined the use thereof. The fair value of the land at year end on 31 December 2013 was determined to be R750 000. Purchased intangible asset - Formula On 1 January 2012 Simply Foods Ltd purchased a formula to prepare a chicken seasoning for R400 000. The formula was available for use, as intended by management, from acquisition date. However, the company only used the formula from 1 April 2012. The formula has no residual value and an estimated useful life of 5 years. On 31 December 2013 a similar formula was developed by a competitor and introduced to the market. As a result thereof, the directors of the company determined that the expected future cash flows from their own formula will be less than originally estimated. On 31 December 2013 the fair value less costs to sell of the formula was determined to be R195 000 and the value in use, calculated at a pre-tax discount rate of 20% per annum, to be R205 000. Internally generated intangible asset - Recipe During the 2012 financial year the directors of Simply Foods Ltd decided to expand their product range to include an exclusive range of pasta sauces, prepared according to their own secret recipe that they will develop in-house. Research for this recipe commenced on 1 September 2012 and research expenses of R30 500 were incurred for the year ended 31 December 2012. Research continued in the 2013 financial year.
36
FAC3702/101
ASSIGNMENT 02 (second semester) (continued) On 28 February 2013 management was presented with sufficient information to indicate that all the criteria for recognition of the recipe as an intangible asset were met. The development phase commenced on 1 March 2013 and was completed on 31 July 2013. Production of the pasta sauces commenced immediately thereafter. The following directly attributable costs were incurred evenly during the current financial year until 31 July 2013: R 42 500 • General overhead expenses 150 000 • Salaries 55 000 • Staff training 70 000 • Water and electricity Depreciation of a machine used in the development phase from 1 March 2013 to 31 July 2013 amounted to R33 000. It is estimated that the recipe has a residual value of Rnil and a useful life of 6 years. Additional information 1. It is company policy to account for owner-occupied land and buildings according to the revaluation model. On revaluation, accumulated depreciation is eliminated against the gross carrying amount of the asset. Depreciation is provided according to the straight-line method over the expected useful lives of the assets. 2. It is company policy to account for investment property according to the fair value model. The carrying amount of the investment property will be recovered through sale. 3. The gross replacement value and the fair value of the properties were determined by an independent sworn appraiser, with reference to observable prices in an active market. 4. It is company policy to account for intangible assets according to the cost model and to provide for amortisation according to the straight-line method over the expected useful lives of the assets. 5. The South African normal tax rate is 28%. 66,6% of capital gains are taxable. 6. The South African Revenue Service allows a tax allowance over 25 years on the processing plant according to the straight-line method. A tax allowance on the intangible assets of 3 years according to the straight-line method is allowed. All these allowances are not apportioned for part of a year. 7. Deferred tax is provided for on all temporary differences using the statement of financial position approach. There are no other temporary differences except those mentioned in the question. There will be sufficient taxable income in future against which any unused tax losses can be utilised. 8. Assume all amounts to be material.
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ASSIGNMENT 02 (second semester) (continued) Please note: • Round all amounts to the nearest Rand. • Ignore any VAT implications. MULTIPLE CHOICE QUESTIONS: Questions 1 - 10 relate to the annual financial statements of Simply Foods Ltd for the year ended 31 December 2013, that complies with the requirements of International Financial Reporting Standards. Each question has only one correct answer. Please note: For all the capital gains tax calculations use 28% x 66,6% to ensure that rounding does not affect your answer. Do not round the CGT rate. QUESTION 1: The revaluation of the land and building of the processing plant should be disclosed in the annual financial statements of Simply Foods Ltd for the year ended 31 December 2013, as follows: (1) (2) (3) (4) (5)
Revaluation surplus of R477 917 (Land: R250 000; Building: R227 917) Revaluation surplus of R378 750 (Land: R250 000; Building: R128 750) Revaluation surplus of R400 000 (Land: R250 000; Building: R150 000) Fair value adjustment of R477 917 (Land: R250 000; Building: R227 917) Fair value adjustment of R378 750 (Land: R250 000; Building: R128 750) (2)
QUESTION 2: The deferred tax balance, relating to only the land of the processing plant of Simply Foods Ltd at year end on 31 December 2013, amounts to: (1) (2) (3) (4) (5)
R9 324 deferred tax liability R70 000 deferred tax asset R46 620 deferred tax asset R70 000 deferred tax liability R46 620 deferred tax liability (2)
QUESTION 3: The deferred tax balance, relating to only the building of the processing plant of Simply Foods Ltd at year end on 31 December 2013, amounts to: (1) (2) (3) (4) (5)
R23 838 deferred tax liability R35 793 deferred tax liability R82 413 deferred tax liability R23 838 deferred tax asset R35 793 deferred tax asset (2)
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FAC3702/101
ASSIGNMENT 02 (second semester) (continued) QUESTION 4: The vacant land, Erf 88, Sandton, should be disclosed in the annual financial statements of Simply Foods Ltd for the year ended 31 December 2013, as follows: (1) (2) (3) (4) (5)
Investment property with a carrying amount of R700 000 Investment property with a carrying amount of R750 000 Property, plant and equipment with a carrying amount of R700 000 Property, plant and equipment with a carrying amount of R750 000 Property, plant and equipment with a carrying amount of R500 000 (2)
QUESTION 5: The deferred tax balance, relating to the vacant land, erf 88, Sandton, of Simply Foods Ltd at year end on 31 December 2013, amounts to: (1) (2) (3) (4) (5)
R9 324 deferred tax liability R9 324 deferred tax asset R14 000 deferred tax liability R14 000 deferred tax asset R46 620 deferred tax liability (2)
QUESTION 6: Amortisation provided on the purchased formula of Simply Foods Ltd for the years ended 31 December 2012 and 31 December 2013 respectively, amounted to: (1) (2) (3) (4) (5)
R60 000 (2012 financial year) and R80 000 (2013 financial year) R80 000 (2012 financial year) and R80 000 (2013 financial year) R80 000 (2012 financial year) and R60 000 (2013 financial year) R133 333 (2012 financial year) and R133 333 (2013 financial year) R100 000 (2012 financial year) and R133 333 (2013 financial year) (2)
QUESTION 7: The tax base of the purchased formula of Simply Foods Ltd at year end on 31 December 2013, amounts to: (1) (2) (3) (4) (5)
R266 667 R133 333 R53 333 R71 666 Rnil (2)
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ASSIGNMENT 02 (second semester) (continued) QUESTION 8: The recoverable amount of the purchased formula of Simply Foods Ltd at year end on 31 December 2013, amounts to: (1) (2) (3) (4) (5)
R200 000 R240 000 R205 000 R195 000 R320 000 (2)
QUESTION 9: The development costs relating to the internally generated intangible asset, the secret recipe, should be disclosed in the annual financial statements of Simply Foods Ltd on 31 December 2013, as follows: (1) (2) (3) (4) (5)
Intangible asset with a carrying amount position Intangible asset with a carrying amount position Expense of R220 000 in the statement income Expense of R190 143 in the statement income Intangible asset with a carrying amount position
of R220 000 in the statement of financial of R190 143 in the statement of financial of profit or loss and other comprehensive of profit or loss and other comprehensive of R253 000 in the statement of financial (2)
QUESTION 10: The research costs relating to the internally generated intangible asset, the secret recipe, should be disclosed in the annual financial statements of Simply Foods Ltd on 31 December 2012, as follows: (1) (2) (3) (4) (5)
Research expense of comprehensive income Research expense of comprehensive income Intangible asset with a position Intangible asset with a position Intangible asset with a position
R30 500 in the statement of profit or loss and other R28 806 in the statement of profit or loss and other carrying amount of R30 500 in the statement of financial carrying amount of R28 806 in the statement of financial carrying amount of R25 417 in the statement of financial (2)
Ref:/ FAC3702_2014_TL_101_3_E.pdf © UNISA 2014
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