FAC3702/101/3/2018
Tutorial letter 101/3/2018 Distinctive Financial Reporting
FAC3702 Semesters 1 & 2 Department of Financial Accounting
IMPORTANT INFORMATION: This tutorial letter contains important information about your module. Please register on myUnisa, activate your myLife e-mail address and make sure that you have regular access to the myUnisa module website, FAC3702-2018-S1/2. When you submit assignments, remember that you are not allowed to copy another student’s assignment. That is plagiarism, a form of theft.
CONTENTS Page 1
INTRODUCTION ............................................................................................................................ 4
2
FORMAT OF FAC3702 .................................................................................................................. 4
2.1
Fully online .................................................................................................................................... 4
2.2
Printed materials ............................................................................................................................. 5
3
LECTURERS AND CONTACT DETAILS ...................................................................................... 5
3.1
Lecturers ......................................................................................................................................... 5
3.2
Department ..................................................................................................................................... 6
3.3
College Information Coordinators ................................................................................................... 6
4
RESOURCES FOR FAC3702 ........................................................................................................ 6
4.1
Prescribed books ............................................................................................................................ 6
4.2
Recommended books .................................................................................................................. 7
4.3
Free computer and internet access ................................................................................................ 7
5
STUDENT SUPPORT SERVICES FOR FAC3702 ........................................................................ 7
5.1
Tutor assistance .............................................................................................................................. 7
5.1.1 Face to face tutors .......................................................................................................................... 7 5.1.2 E-tutor support ................................................................................................................................ 8 5.1.3 Group discussions .......................................................................................................................... 8 6
STUDY PLAN FOR FAC3702 ........................................................................................................ 9
6.1
Suggested study approach ............................................................................................................. 9
6.2
Study programme ........................................................................................................................... 9
7
ASSESSMENT ............................................................................................................................. 11
7.1
Assessment plan ........................................................................................................................... 11
7.2
General assignment numbers ....................................................................................................... 11
7.2.1 Unique assignment numbers ........................................................................................................ 12 7.2.2 Due dates for assignments ........................................................................................................... 12 7.2.3 Finality of due dates ...................................................................................................................... 12 7.3
Submission of assignments .......................................................................................................... 12
7.4
Importance of working through questions ..................................................................................... 13
7.5
Plagiarism ..................................................................................................................................... 13
8
EXAMINATION ............................................................................................................................. 14
8.1
Examination admission ................................................................................................................. 14
8.2
Examination period ....................................................................................................................... 14
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FAC3702/101 8.3
Previous examination papers ........................................................................................................ 14
8.4
Information on the examination ..................................................................................................... 14
8.5
Calculator policy ............................................................................................................................ 14
9
FREQUENTLY ASKED QUESTIONS .......................................................................................... 14
10
CONCLUSION .............................................................................................................................. 15
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
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1 INTRODUCTION Dear Student We are pleased to welcome you to FAC3702 – Distinctive Financial Reporting and trust 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 semester. 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 regards 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 contain important 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 module site on myUnisa for FAC3702 frequently. The module site for the module is: FAC3702-18-S1 for first semester students; and FAC3702-18-S2 for second semester students. Because this is a fully online module, you need to go online to see your study material and read what to do for the module. Go to the following website: 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. You can also check in the ‘more-tab’ if you cannot find it in the orange blocks. Click on the module you want to open. We trust that you will enjoy this module and wish you all the best!
2 FORMAT OF FAC3702 2.1 Fully online 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 your studies and the challenges that you might encounter and to participate in online discussion forums. Importantly, myUnisa contains the Official Study Material 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.
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FAC3702/101 2.2 Printed materials Because we want you to be successful in this online module, we also provide you with some of the study material in printed format. This will allow you to read the study material, even if you are not online. In addition to this tutorial letter you will receive a printed copy of the online study material from myUnisa. While these printed materials may appear slightly different from the online study material, they are exactly the same and have been duplicated from the online myUnisa website. Remember, the printed support material are a back-up to everything that is found online, on myUnisa. In other words, you should NOT wait for the printed support material to arrive to start studying. Please consult with the publication myStudies@Unisa for more information on the activation of your myLife email address as well as how to obtain access to the myUnisa module site. You will receive the following study material for this module (which will also be available online): Study material Study Guide Tutorial letter 101 Tutorial letter 102 Tutorial letter 103 Tutorial letter 201 Tutorial letter 202
Content Learning Units Important information such as compulsory assignments Integrated questions and suggested solutions Additional study material 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 LECTURERS AND CONTACT DETAILS 3.1
Lecturers
You may contact your lecturers by post, e-mail, telephone or on myUnisa. Lecturers
Office number
Telephone number
Mrs M Evans Mrs M de Wet Mr DO Khumalo Mr J van Rooyen
AJH van der Walt 2-55 AJH van der Walt 2-60 AJH van der Walt 2-43 AJH van der Walt 2-56
(012) 429 8606 (012) 429 4844 (012) 429 4408 (012) 429 2538
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. An available lecturer will take your call and assist you as promptly as they can. The telephone numbers of the lecturers are listed above.
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E-mail You can also communicate with the lecturers via e-mail. Please make use of the following e-mail 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 e-mails received by lecturers from students, it is not always possible to reply to these e-mails immediately. Please be patient as your e-mails 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 3.2
Department
The Department of Financial Accounting is situated on the main campus on the second floor of the AJH van der Walt Building. The contact numbers of the department of Financial Accounting are as follows: 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. 3.3
College Information Coordinators
Mr. Jabulani Chauke: (012) 429 2982 Ms. Christine Tuge: (012) 429 2233 E-mail:
[email protected] College Information Hub (012) 429 4211 Students can find general Unisa contact details in the publication myStudies@Unisa. Always have your student number at hand when contacting the University.
4 RESOURCES FOR FAC3702 4.1
Prescribed books The study material as such is not exhaustive for purposes of tuition, and it is essential that you have at your disposal the following prescribed book:
Koppeschaar, ZR, et al 2016. Descriptive Accounting. 20th ed. LexisNexis: Durban. Please refer to the list of official booksellers and their addresses in the publication myStudies@Unisa. Prescribed books can be obtained from the University’s official booksellers. Should you have any difficulties obtaining books from the official booksellers, please contact the
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FAC3702/101 Prescribed Book Section as soon as possible at telephone number (012) 429 4152 or e-mail
[email protected] STUDENTS ARE REQUIRED TO USE A NON-PROGRAMMABLE FINANCIAL CALCULATOR FOR THIS MODULE. (REFER TO POINT 8.5 FOR FURTHER INFORMATION) 4.2
Recommended books
A guide through IFRS (SAICA handbook). Latest edition. 4.3
Free computer and internet access
Unisa has entered into partnerships with establishments (referred to as Telecentres) in various locations across South Africa to enable you (as a Unisa student) free access to computers and the Internet. This access enables you to conduct the following academic related activities: registration; online submission of assignments; engaging in e-tutoring activities and signature courses; etc. Please note that any other activity outside of these is for your own costing e.g. printing, photocopying, etc. For more information on the Telecentre nearest to you, please visit www.unisa.ac.za/telecentres.
5 STUDENT SUPPORT SERVICES FOR FAC3702 Important information appears in your myStudies@Unisa publication. 5.1 Tutor assistance A tutor is a qualified professional appointed by the university to assist and support students in their journey to graduateness / successful completion of their qualifications. Effective tutor assistance help you to:
take responsibility for your own learning; develop analytical skills; develop skills in teamwork and cooperative learning; and develop listening, communication, presentation and debating skills.
Types of tutor assistance
Face-to-face tutoring E-tutor support
5.1.1
Face to face tutors
A face-to-face tutorial is an organised session where students and tutors meet regularly at a common venue and at scheduled times to discuss and solve problems with the content of their study material e.g. principles, suggested solutions etc. A face-to-face tutorial has a number of advantages, namely:
It provides you with great opportunities to interact with your tutors and other students and get a better understanding of the course content. It encourages you to actively participate in the tutorial sessions. It helps you to build a relationship with other students.
What is the role of learners in face to face tutorials? If students want to benefit from tutorials, they must participate effectively by meeting the following requirements:
prepare adequately for tutorials; attend regularly and be punctual;
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encourage fellow students to attend tutorials regularly; and cooperate with tutors.
Where can I go to if I want to attend face to face tutorials? Tutorials are available at Unisa Regional Learning Centres throughout the country. Please visit the Unisa website for contacts details of the centre nearest to you. How to join face to face tutorials
At the Unisa Regional Learning Centre, a tutorial officer will help you to complete the Tutorial enrolment form. Tutorials take place weekday evenings and Saturday mornings – look for the tutorials of your modules on the timetable at the centre notice boards or on the Unisa regional website. You will be notified through SMS about the starting date of your tutorial session/s. Tutorials are free.
Students who are interested in tutor assistance can obtain the telephone numbers and details of the learning centres from the myStudies@Unisa publication. 5.1.2
E-tutor support
E-tutoring is an organised session where students and e-tutors interact regularly, online. The teaching and learning platform is myUnisa. Tools such as discussion forums are used to facilitate teaching and learning. E-tutoring has a number of advantages:
The use of the myUnisa platform provides you with an opportunity to interact with your e-tutor and fellow students online, using the various tools available. Compared to face-to-face tutors your e-tutor is accessible for longer periods, each day of the week. It helps to develop technical skills required for an online environment.
You will be allocated an e-tutor for each module you have registered for. (Provided the module has etutoring). You will then be notified by sms about the details of your e-tutor as soon as you have been allocated one. Your e-tutor will contact you on your mylife e-mail for details of the tutorials. Most Unisa learning centres have computer lab facilities from where you can access myUnisa. Provision is also made through the establishment of telecentres. Alternatively, you will need a device with Internet connection, e.g. Laptop, tablet/iPad, smartphone, etc. A group of 200 students is linked to one e-tutor. Students in a group are able to interact and learn from one another. Each group has their own separate site on myUnisa. These sites are numbered and you will receive your group number by email and SMS. Don’t be confused! You will now have two sites for those modules with online tutoring, i.e. the main module site and the group module site. In the main module site you will find the official study material files that you can download. You should also submit your assignments here. The primary lecturer of the module may from time to time communicate with the entire class through this site. The group module site is where you can interact with your tutor and other group members. You can also participate in discussions, post academic-related queries and receive specific tutor support. 5.1.3
Group discussions
Further communication regarding group discussions will follow in an announcement on myUnisa.
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FAC3702/101
6 STUDY PLAN FOR FAC3702 6.1 Suggested study approach Firstly work through the relevant sections of tutorial letter 001 (Study guide) pertaining to the assignment to be attempted. Ensure that you understand the work and do the examples on your own, without looking at the answers. Compare your answer to the one in the tutorial letter and pinpoint where you made mistakes. Restudy the relevant section and ensure that you now understand the solution to the example. If you still do not understand, write the page reference and the problem on your “queries list” so that you can phone one of the lecturers for an explanation. Before attempting an assignment, ensure that you have prepared the work up to an examination standard. Only thereafter should you attempt answering the assignment questions under examination conditions. The assignment must in effect constitute your first revision of the study material which you have studied. In other words, the assignment should not serve as a checklist of the work 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 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, 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 enjoy success in the examination. 6.2 Study programme Use your publication myStudies@Unisa 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 February (first semester) and July (second semester) and that the full module should be completed by approximately the middle of April (first semester) and September (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.
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SEMESTER 1
The following table is a suggested study programme for completing the syllabus for this module: Week commences on 5 February 2018
Assignment no
Week
Learning unit
1-2
Property, plant and equipment
3-4
Investment property
19 February 2018
5
Impairment of assets
5 March 2018
6
Intangible assets
12 March 2018
7
Non-current assets held for sale and discontinued operations
19 March 2018
8
Financial instruments: Presentation, Recognition and Measurement
26 March 2018
01
29 March 2018
2 April 2018
02
9 April 2018
9 - 10 11 - Exam
The effects of changes in foreign exchange rates Revision of all learning units
Due date
16 April 2018
SEMESTER 2
The following table is a suggested study programme for completing the syllabus for this module:
1-2
Learning unit Property, plant and equipment
3-4
Investment property
30 July 2018
5
Impairment of assets
13 August 2018
6
Intangible assets
20 August 2018
7
Non-current assets held for sale and discontinued operations
27 August 2018
8
Financial instruments: Presentation, Recognition and Measurement
Week
Week commences on 16 July 2018
Due date
01
30 August 2018
02
13 September 2018
3 September 2018
The effects of changes in foreign 10 September 2018 exchange rates 11 - Exam Revision of all learning units 24 September 2018 9 - 10
Assignment no
We feel that at this point a word of warning would not be amiss. Please do not allow yourself to get behind with your study programme. Regaining of lost time is seldom achieved.
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FAC3702/101
7 ASSESSMENT 7.1Assessment 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. A final mark of 50% is required from a student to pass a module. This final mark is calculated as follows: (20% x mark obtained for both compulsory assignments) + (80% 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) 100% 70% 50% 30% 20% 10% 0%
Contribution to final mark at 20% 20% 14% 10% 6% 4% 2% 0%
Exam mark contribution required to pass (50% minus assignment mark contribution) 32%1 36% 40% 44% 46% 48% 50%
Minimum exam mark required to pass 40%1 45% 50% 55% 58% 60% 63%
Please ensure that the compulsory assignments reaches the University before the due dates - late submission of the assignments will result in you not being admitted to the examination. Please refer to section 9.2.2 of this tutorial letter for the respective due dates. Sub minimum requirements 1
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 the 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 the students who wrote the supplementary examination. 7.2 General assignment numbers Assignments are numbered consecutively per module, starting from 01.
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7.2.1
Unique assignment numbers
Each assignment has its own unique assignment number. The following are the unique assignment numbers:
Assignment Assignment 1 Assignment 2 7.2.2
SEMESTER 1 Type Unique number Written 877049 MCQ 860883
Assignment Assignment 1 Assignment 2
SEMESTER 2 Type Unique number Written 680895 MCQ 873564
Due dates for assignments SUBMISSION OF ASSIGNMENT 01 IS COMPULSORY TO OBTAIN EXAMINATION ADMISSION. ASSIGNMENT 01 AND ASSIGNMENT 02 TOGETHER WILL COUNT 20% TOWARDS YOUR FINAL MARK FOR THIS MODULE. Unique number
Due date
Compulsory 01/2018 – FIRST SEMESTER
877049
29 March 2018
Compulsory 02/2018 – FIRST SEMESTER
860883
9 April 2018
Compulsory 01/2018 – SECOND SEMESTER
680895
30 August 2018
Compulsory 02/2018 – SECOND SEMESTER
873564
13 September 2018
Assignment number
7.2.3
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 ASSIGNMENT 01 IS RECEIVED AFTER THE DUE DATE, YOU WILL NOT OBTAIN ADMISSION TO THE EXAMINATION.
7.3 Submission of assignments (a) Students may submit written assignments and MCQ assignments either by post, Mobile phone 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 publication myStudies@Unisa. 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.
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FAC3702/101 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. Please note that only certain subsections of written assignments will be marked. 7.4 Importance of working through questions Please note that it is not possible to cover every aspect of the tutorial matter in the assignments only. Assignment questions, self-assessment questions 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 work through all the above mentioned questions as: • • •
the questions improve your knowledge of accounting; increase your speed when answering questions; and provide practice which is essential in your preparation for the exam.
7.5 Plagiarism Plagiarism is the act of taking words, ideas and thoughts of others and passing them off as your own. It is a form of theft which involves a number of dishonest academic activities. The disciplinary code for students is given to all students at registration. Students are advised to study the code. Kindly read the University Policy for Copyright Infringement and Plagiarism as well. You are not allowed to copy another student’s assignment. The University will take stern actions against such students. We urge you once again to refrain from such malpractices. Although students may work together when preparing for assignments, each student must prepare and submit his or her own individual assignment.
PLAGIARISM DECLARATION I declare that this assignment, submitted by myself, is my own work and that I have referenced all the sources that I have used. By submitting any FAC3702 assignment, I declare that • I have read the Unisa Students' Disciplinary Code; • I know what plagiarism is, that plagiarism is wrong and that disciplinary steps can be taken against me if I am found guilty of plagiarism; • My assignments for FAC3702 are my own work; • I have not allowed any other student to copy my work; • I know that if I am found to be in violation of this declaration I will receive 0%. Please note: You do not have to submit the declaration. By submitting any FAC3702 assignment, you automatically declare that you adhere to all the above with regard to the specific assignment. NB: Although students may work together when preparing assignments, each student must write/type and submit his or her own individual assignment. It is unacceptable for students to submit identical assignments on the basis that they worked together. That is copying (a form of plagiarism) and none of these assignments will be marked. Furthermore, you may be penalised or subjected to disciplinary proceedings by the University.
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8 EXAMINATION Use your publication myStudies@Unisa for general examination guidelines and examination preparation guidelines. It should be mentioned that you will write one examination paper for this module. 8.1 Examination admission SUBMISSION OF ASSIGNMENT 01 IS COMPULSORY TO OBTAIN EXAMINATION ADMISSION. ONLY STUDENTS THAT COMPLY WITH THIS REQUIREMENT WILL BE ADMITTED TO THE EXAMINATION OF FAC3702. ASSIGNMENT 01 AND ASSIGNMENT 02 TOGETHER WILL COUNT 20% TOWARDS YOUR FINAL MARK FOR THIS MODULE.
Please note: The compulsory assignments (assignment 01 and 02) count 20% towards your final mark. The mark obtained by you in the examination will determine the remaining 80% of your final mark for this module. 8.2 Examination period During the module time-frame of the respective semester, the Examination Section will provide you with information regarding the examination in general, examination venues, examination dates and examination times. 8.3 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” of previous examination papers available to students. 8.4 Information on the examination To help you in your preparation for the examination you will receive an exam letter as an annexure to a tutorial letter. This letter will include information that will explain the format of the examination paper and general advice the lecturers want to share with students. 8.5 Calculator policy Candidates may only use silent, electronic, battery-driven pocket calculators subject to the following conditions:
Calculators must be cordless, and may not have print-out facilities or alpha keys, Any financial calculator will be allowed as the following table of present values will not be provided: Tables of present value factors for various interest rates for varying periods Tables of future value factors for various interest rates for varying periods The calculator function on mobile telephones or any electronic device (i.e. laptops and /or any Smart phone) may not be used, and Candidates may not share a calculator with another candidate in the examination room.
9 FREQUENTLY ASKED QUESTIONS The publication myStudies@Unisa contains an A-Z guide of the most relevant study information.
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FAC3702/101
10 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
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ANNEXURE A: ASSIGNMENT 01 FOR FAC3702 (COMPULSORY FOR FIRST SEMESTER REGISTRATION) SUBMISSION OF ASSIGNMENT 01 IS COMPULSORY TO OBTAIN EXAMINATION ADMISSION. ASSIGNMENT 01 WILL CONTRIBUTE 15% TOWARDS YOUR FINAL MARK.
SEMESTER 1 UNIQUE NUMBER:
877049
DUE DATE:
29 March 2018
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 question. Please note that only certain subsections of this question may be marked. 5. This assignment covers learning units 1 and 2 of the study guide. 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 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.
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. The PDF file must not be a read only file. Any format other than PDF will not be accepted by myUnisa Written assignments can ONLY be submitted once on myUnisa. No corrections to your assignment can be done after submission.
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FAC3702/101 ASSIGNMENT 01 (40 marks) (72 minutes) Techlink Ltd is a manufacturing company situated in the North West Province. The company has a 30 June year-end. The following details are available regarding the assets of Techlink Ltd: Manufacturing property Techlink Ltd owns stand 326, Sandton where the company carries out its manufacturing activities. The property was originally purchased on 1 March 2015 for R3 200 000 (land: R1 400 000; building: R1 800 000). The property was available for use, as intended by management, on acquisition date and was also brought into use on this date. On acquisition date, a residual value of R570 000 was allocated to the building and the useful life of the building was estimated to be 25 years. On 30 June 2017, the fair value of the land was determined to be R1 500 000 whilst the net replacement value of the building was determined to be R1 840 000. At year-end on 30 June 2017, the residual value and estimated useful life of the building remained unchanged. No decision has been taken by the company to sell this property. Administration property On 1 August 2015 Techlink Ltd purchased stand 1095, Bedfordview at a cost of R2 400 000 (land: R800 000; building: R1 600 000) for its own administrative purposes. The property was available for use, as intended by management, on acquisition date and was also brought into use on this date. On acquisition date an estimated useful life of 30 years and a residual value of Rnil was allocated to the building. During March 2017, Techlink Ltd was approached by another company about the possibility of leasing this specific property from Techlink Ltd due to the property’s central location. Subsequently the board of directors of Techlink Ltd decided to relocate their own administrative function to their manufacturing property. Techlink Ltd vacated their administrative building on 1 April 2017. After upgrading the building at a cost of R100 000, a six year operating lease contract was concluded, effective from 1 June 2017. The fair values and net replacement values of this property, on the respective dates, were as follows:
Land .................................................................................. Building .............................................................................
1 April 2017 R 1 300 000 1 600 000
30 June 2017 R 1 500 000 1 650 000
Machinery On 1 September 2016 Techlink Ltd purchased a new machine from a British company for R1 665 000. The installation and pre-production test run were successfully concluded on 30 September 2016 at a cost of R35 000. The samples produced in the pre-production test run were sold for R8 000 and invoiced by Techlink Ltd on 30 September 2016. On 1 October 2016 the machine was available for use, as intended by management and it was also brought into use on this date. The machine has an estimated useful life of 5 years. A residual value of Rnil was allocated to the machine. Additional information 1. The following is an extract from the accounting policies of Techlink Ltd: During the current financial year, the directors of Techlink Ltd decided to revalue its owneroccupied land and buildings for the first time. The accounting policy regarding owner-occupied land and buildings was therefore changed from the cost model to the revaluation model. On revaluation, the accumulated depreciation is eliminated against the gross carrying amount of the asset. Any revaluation surplus realises through the use of the underlying asset.
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ASSIGNMENT 01 (continued)
Investment property is accounted for according to the fair value model. The carrying amount of the investment property will be recovered through sale. Machinery is accounted for according to the cost model. Depreciation is written off in accordance with the straight-line method over the assets’ estimated useful lives and is calculated on the most recent revalued amounts.
2. All the net replacement values and fair values of the assets were determined by an independent sworn appraiser. The values were determined with reference to current market prices of similar properties in the same location and condition. 3. The South African Revenue Service allows the following capital allowances:
A 5% annual building allowance on both the buildings according to section 13(1) and 13quin of the Income Tax Act respectively, according to the straight-line method, not apportioned for part of a year; A tax allowance on the machinery according to section 12C of the Income Tax Act, allowing a 40% deduction in the first year in which the machinery is brought into use and thereafter a 20% deduction per annum for the next three years, not apportioned for part of a year.
4. Installation costs and revenue out of the pre-production test run of the machinery will be regarded as of a capital nature for taxation purposes. 5. The South African normal corporate tax rate is 28%. The capital gains inclusion rate is 80%. 6. Deferred tax is provided for on all temporary differences in accordance with the statement of financial position approach. There are no other items causing temporary or exempt differences except those identified in the question. The company will have sufficient taxable profits in the future, against which any unused tax losses can be utilised. 7. Assume that land and buildings are regarded as separate classes of assets. 8. Assume that all amounts are material. REQUIRED: Marks (a)
Disclose the following notes to the annual financial statements of Techlink Ltd for the year ended 30 June 2017:
(b)
Property, plant and equipment (total column is not required) Deferred tax (only relating to the Sandton property)
Prepare the general journal entry in the accounting records of Techlink Ltd on 1 April 2017 to correctly record the reclassification of the Bedfordview property.
29 8½ 2½ [40]
Please note: Your answer must comply with the requirements of International Financial Reporting Standards (IFRS) Journal narrations are not required. No abbreviations for general ledger account names can be used. Accounting policy notes are not required. Ignore comparative information. Show all calculations. Round all amounts to the nearest Rand.
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FAC3702/101 ANNEXURE B: ASSIGNMENT 02 FOR FAC3702 (COMPULSORY FOR FIRST SEMESTER REGISTRATION) ASSIGNMENT 02 WILL CONTRIBUTE 5% TOWARDS YOUR FINAL MARK.
SEMESTER 1 UNIQUE NUMBER:
860883
DUE DATE:
9 April 2018
PLEASE NOTE: 1. This assignment consists of 10 multiple choice questions. 2. This assignment covers learning units 1 to 4 of the study guide. Work carefully through the relevant tutorial matter before attempting 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 markreading sheet with, say, the unique number 103039, it identifies 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 a 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 (20 marks) (36 minutes) Questions 1 – 6 relate to the annual financial statements of Datatec Ltd for the year ended 30 June 2017. Datatec Ltd is an information technology company situated in Menlyn, Gauteng. The company has a 30 June year-end. Purchased software On 1 August 2015 Datatec Ltd purchased new software to utilise in the operation of one of its mainframe servers at a cost of R600 000. Datatec Ltd incurred direct labour costs of R120 000 to customise the software so that it integrates better with the systems used by the company. An additional amount of R30 000 was incurred to train the staff of Datatec Ltd on the optimal use of the new purchased and customised software. This software was available for use, as intended by management, on 1 September 2015 and on this date the useful life was estimated to be 3 years. On 30 June 2017 due to the introduction of new software in the market, there was an indication of a possible impairment of the purchased software. On this date the fair value less costs to sell of the software was estimated to be R250 000. The expected net cash inflows from the use of the software for the remaining useful life of the software were estimated to be as follows:
For the financial year from 1 July 2017 to 30 June 2018 – R240 000 For the financial year from 1 July 2018 to 30 June 2019 – R30 000
An applicable discount rate before tax is 12% per annum. The remaining useful life of the software remained unchanged. Internally generated application On 1 July 2016, the research division of Datatec Ltd commenced with research on an application called SmartApp. On 31 January 2017, the directors of Datatec Ltd determined that all the criteria for the recognition of an internally generated intangible asset were met and the development of SmartApp commenced immediately. The development of SmartApp was completed on 1 June 2017. The following costs were evenly incurred during the research and development of the Smartapp: Salary of information technology specialist Depreciation of computer equipment
R 400 000 300 000
The information technology specialist as well as the computer equipment were exclusively used for the Smartapp project during the research and development thereof. The application was available for use, as intended by management, on 30 June 2017 and on this date the useful life was estimated to be 3 years. Additional information 1. It is the accounting policy of the company to account for intangible assets according to the cost model and to provide for amortisation in accordance with the straight-line method over the expected useful lives of the assets.
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FAC3702/101 ASSIGNMENT 02 (continued) 2. Assume all amounts are material. Please note:
Round all amounts to the nearest Rand. VAT implications can be ignored.
MULTIPLE CHOICE QUESTIONS These questions can be answered online. Log onto myUnisa, choose the FAC3702 module tab and access the assignment tool. Click on the submit action next to assignment 02. Remember each question has only one correct answer.
QUESTION 1 According to the requirements of IAS 38, Intangible assets, the cost price of the purchased software in the annual financial statements of Datatec Ltd at year-end on 30 June 2016, amounts to: (1) (2) (3) (4) (5)
R600 000 R120 000 R690 000 R30 000 R720 000
(2)
QUESTION 2 The remaining useful life of the purchased software, as disclosed in the intangible asset note to the annual financial statements of Datatec Ltd for the year ended 30 June 2017, according to the requirements of IAS 38, Intangible assets, is as follows: (1) (2) (3) (4) (5)
indefinite 3 years 2 years, 2 months 1 year, 3 months 1 year, 2 months
(2)
QUESTION 3 The recoverable amount of the purchased software that will be disclosed in the statement of financial position of Datatec Ltd for the year ended 30 June 2017, according to the requirements of IAS 36, Impairment of assets amounts to: (1) (2) (3) (4) (5)
R280 000 R267 033 R238 202 R250 000 R240 000
(2)
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ASSIGNMENT 02 (continued) QUESTION 4 According to IAS 36, Impairment of assets, which of the following statement(s) is/(are) correct regarding a reversal of an impairment loss? (a) If the asset (other than goodwill) is accounted for on the cost basis, the reversal of an impairment loss is recognised in the profit or loss section of the statement of profit or loss and other comprehensive income; (b) If the asset (other than goodwill) is accounted for on the cost basis, the reversal of an impairment loss is recognised in the other comprehensive income section of the statement of profit or loss and other comprehensive income; (c) If the asset is revalued, the reversal of the impairment loss is treated as an increase in the revaluation surplus directly in the profit or loss section of the statement of profit or loss and other comprehensive income. (d) If the asset is revalued, the reversal of the impairment loss is treated as an increase in the revaluation surplus directly in the other comprehensive income section of the statement of profit or loss and other comprehensive income. (e) The reversal of the impairment loss is recognised as an asset in the statement of financial position. The correct answer is: (1) (2) (3) (4) (5)
d and e only a and d only a only b and d only d and e only
(2)
QUESTION 5 According to the requirements of IAS 38, Intangible assets, the directly attributable costs comprising of the salary of the information technology specialist and depreciation on the computer equipment relating to the research and development of SmartApp, will be recognised in the annual financial statements of Datatec Ltd for the year ended 30 June 2017, as follows: (1) R254 545 will be expensed as research costs in the statement of profit or loss and other comprehensive income and R145 455 will be capitalised as development costs of an internally generated intangible asset. (2) R445 454 will be expensed as research costs in the statement of profit or loss and other comprehensive income and R254 546 will be capitalised as development costs of an internally generated intangible asset. (3) R700 000 will be capitalised as development costs of an internally generated intangible asset. (4) R700 000 will be expensed as research costs in the statement of profit or loss and other comprehensive income. (5) R254 546 will be expensed as research costs in the statement of profit or loss and other comprehensive income and R445 454 will be capitalised as development costs of an internally generated intangible asset. (2)
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FAC3702/101 ASSIGNMENT 02 (continued) QUESTION 6 According to IAS 38, Intangible assets, which one of the following statements is incorrect? (1) The residual values of intangible assets with a finite useful life are deemed to be Rnil unless there is a commitment by a third party to purchase the asset at the end of its useful life or there is an active market for the asset which will exist at the end of the asset’s useful life. (2) If an intangible asset’s carrying amount is increased as a result of a revaluation, that increase is accounted for in other comprehensive income in the statement of profit or loss and other comprehensive income. (3) Amortisation of an intangible asset ceases at the earlier of the date on when the asset is no longer used or the date on which the asset is classified as held for sale in terms of IFRS 5, Noncurrent assets held for sale. (4) Intangible assets with an indefinite useful life are not amortised but tested for impairment annually in terms of IAS 36, Impairment of assets and will be tested more often if there is an indication that the asset might be impaired. (5) If the payment for an intangible asset is deferred beyond normal credit terms, its cost is deemed to be the cash price equivalent, with the interest expense being recognized over the full period of the credit term. (2)
Questions 7 - 10 relate to the annual financial statements of Heels Ltd for the year ended 31 December 2017. Heels Ltd, a company situated in Gauteng, specialises in the manufacturing of high quality shoes. The company has a 31 December year-end. The following details relate to the machinery of the company: Machine J-Choo On 1 January 2016, Heels Ltd purchased machine J-Choo for R1 500 000. The machine was available for use as intended by management on acquisition date. The machine has a residual value of Rnil and it is expected that the machine will produce a total of 480 000 units during its estimated useful life. A total of 49 500 units were produced from acquisition date until 31 December 2016. The machine was withdrawn from use on 1 December 2017 and on 31 December 2017 it was sold for R1 300 000 cash. The machine produced 40 000 units for the year ended 31 December 2017. Machine Spitz On 1 March 2016, Heels Ltd purchased machine Spitz for R2 000 000. The machine was available for use, as intended by management, on acquisition date. The machine has a residual value of Rnil and it is expected that the machine will produce a total of 600 000 units during its estimated useful life. The machine has to undergo a major inspection every 2 years to comply with safety regulations. On acquisition date, the total inspection costs relating to the machine were estimated to be R250 000. The machine produced a total of 40 000 units from acquisition date until 31 December 2016. On 30 November 2017, Heels Ltd carried out the required inspection of the machine and incurred costs of R200 000. For the year ended 31 December 2017 the machine produced 52 000 units.
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ASSIGNMENT 02 (continued) Additional information 1. It is the accounting policy of the company to account for machinery according to the cost model and to provide for depreciation in accordance with the units of production method. The residual values and estimated useful lives of the machines remained unchanged throughout the period. 2. The South African Revenue Service allows a tax allowance on the machinery according to section 12C of the Income Tax Act, allowing a 40% deduction in the first year during which the machine is brought into use and thereafter a 20% deduction per annum for the next three years, not apportioned for part of a year. 3. Assume all amounts are material. Please note: Amounts are to be rounded off to the nearest Rand. VAT implications can be ignored. Deferred tax can be ignored. MULTIPLE CHOICE QUESTIONS: These questions can be answered online. Log onto myUnisa, choose the FAC3702 module tab and access the assignment tool. Click on the submit action next to assignment 02. Remember each question has only one correct answer. QUESTION 7: The profit or loss on the sale of machine J-Choo, as disclosed in the statement of profit or loss and other comprehensive income of Heels Ltd for the year ended 31 December 2017, according to the requirements of IAS 16, Property, plant and equipment, amounts to: (1) (2) (3) (4) (5)
R200 000 loss R45 312 profit R200 000 profit R69 271 profit R79 688 profit
(2)
QUESTION 8: The tax recoupment on the sale of machine J-Choo for the year ended 31 December 2017, amounts to: (1) (2) (3) (4) (5)
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R900 000 R252 000 R600 000 R700 000 R300 000
(2)
FAC3702/101 ASSIGNMENT 02 (continued) QUESTION 9: The derecognition of the inspection component of Machine Spitz as disclosed in the property, plant and equipment note to the annual financial statements of Heels Ltd at year-end on 31 December 2017, according to the requirements of IAS 16, Property, plant and equipment, amounts to: (1) (2) (3) (4) (5)
R191 667 R218 750 R145 833 R250 000 R31 250
(2)
QUESTION 10: Which one of the following statements relating to depreciation is incorrect according to IAS 16, Property, plant and equipment? (1) Depreciation on an asset ceases when an asset becomes temporarily idle or when it is retired from active use. (2) Depreciation on an asset ceases when the asset is derecognized when it is disposed of or when no further economic benefits are expected from the asset. (3) Depreciation is allocated from the date on which the asset is available for use in the location and condition necessary for it to be capable of operating in the manner intended by management. (4) The allocation of depreciation should reflect the pattern in which the asset’s future economic benefits are expected to be consumed by the entity. (5) Revenue based methods to calculate depreciation are not allowed because it reflects a pattern of economic benefits being generated from the asset rather than the expected pattern of consumption of the future economic benefits embodied in the asset. (2)
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ANNEXURE C: ASSIGNMENT 01 FOR FAC3702 (COMPULSORY FOR SECOND SEMESTER REGISTRATION) SUBMISSION OF ASSIGNMENT 01 IS COMPULSORY TO OBTAIN EXAMINATION ADMISSION. ASSIGNMENT 01 WILL CONTRIBUTE 15% TOWARDS YOUR FINAL MARK.
SEMESTER 2 UNIQUE NUMBER:
680895
DUE DATE:
30 August 2018
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 question. Please note that only certain subsections of this question may be marked. 5. This assignment covers learning units 1 and 2 of the study guide. 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 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. 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. The PDF file must not be a read only file. Any format other than PDF will not be accepted by myUnisa Written assignments can ONLY be submitted once on myUnisa. No corrections to your assignment can be done after submission.
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FAC3702/101 ASSIGNMENT 01 (40 marks) (72 minutes) Roast Ltd is a coffee manufacturing company, situated in Gauteng, with a 31 December financial year-end. The following details are available regarding the assets of Roast Ltd: Machinery Roast Ltd owns a machine used for the roasting of a specific blend of coffee. Due to a significant increase in the maintenance costs of this machine, the directors of Roast Ltd decided to replace the old machine with a new machine. Details of the old machine are as follows: Purchase date / Available for use date 1 April 2015
Cost price R 480 000
Useful life 5 years
Residual value R Nil
On 1 September 2016, Roast Ltd purchased a new machine at a cost of R625 000. On 1 March 2017 this new machine was available for use, as intended by management, and was also brought into use on this date. The expected useful life of the new machine is determined to be 6 years and the new machine has no residual value. On 28 February 2017, the old machine was sold for R250 000 cash. The remaining useful life and residual value of both machines remained unchanged throughout the period. Stand 294, Midrand On 1 July 2016, Roast Ltd purchased Stand 294, Midrand for R2 000 000, with the intention to erect a manufacturing building that will be leased out. Construction started in November 2016 and construction costs amounting to R2 900 000 were incurred for the year ended 31 December 2016. The fair value of the property under construction could not be reliably measured at year-end on 31 December 2016. Additional construction costs amounting to R1 000 000 were incurred during the 2017 financial year until construction was completed on 31 May 2017. On 1 June 2017 the tenant occupied the manufacturing building at a monthly rental of R64 000. The fair values of this property on 31 December 2017 were as follows: Land Building
R 2 440 000 4 600 000
Stand 2976, Kayalami Roast Ltd owns an office park in Kayalami, of which 10% (which is considered to be an insignificant portion) of the office space of the building is leased out. The remaining 90% of the office space of the building is used by Roast Ltd for their own administrative purposes. The property was purchased on 1 February 2016 at a cost of R4 800 000 (land: R1 960 000, building: R2 840 000) and was available for use, as intended by management, as well as brought into use on this date. The building has an estimated useful life of 30 years and a residual value of R950 000. The property was revalued for the first time on 31 December 2017 and on this date the fair value of the land and the net replacement value of the building were as follows: R Land 2 100 000 Building 3 200 000 No decision has been made by the company to sell this property. On 31 December 2017 the residual value of the property remained unchanged but the remaining useful life of the property was estimated to be 25 years.
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ASSIGNMENT 01 (continued) Additional information 1. The following is an extract from the accounting policies of Roast Ltd: Owner-occupied land and buildings is accounted for using the revaluation model. On revaluation, the accumulated depreciation is eliminated against the gross carrying amount of the asset. Any revaluation surplus realises through the use of the underlying asset. Investment property is accounted for using the fair value model. The carrying amount of the investment property will be recovered through sale. Machinery is accounted for using the cost model. Depreciation is written off in accordance with the straight-line method over the assets’ estimated useful lives and is calculated on the most recent revalued amounts. 2. All the net replacement values and fair values of the assets were determined by an independent sworn appraiser. The values were determined with reference to current market prices of similar properties in the same location and condition. 3. The South African Revenue Service allows the following capital allowances: A 5% annual building allowance on both the buildings according to section 13(1) and 13quin of the Income Tax Act respectively, according to the straight-line method, not apportioned for part of a year. A tax allowance on the machinery according to section 12C of the Income Tax Act allowing a 40% deduction in the first year during which the machine is brought into use and thereafter a 20% deduction per annum for the next three years, not apportioned for part of a year. 4. The South African normal corporate tax rate is 28%. The capital gains inclusion rate is 80%. 5. Deferred tax is provided for on all temporary differences using the statement of financial position approach. There are no other items causing temporary or exempt differences except those identified in the question. The company will have sufficient taxable profits in future against which any unused tax losses can be utilised. 6. Assume that land and buildings are regarded as separate classes of assets. 7. Assume that all amounts are material. REQUIRED Marks (a)
Disclose the following notes to the annual financial statements of Roast Ltd for the year ended 31 December 2017: Property, plant and equipment (A total column is not required) Deferred tax (only relating to the property)
(b)
Prepare the general journal entry in the accounting records of Roast Ltd on 31 December 2017 to correctly account for the revaluation of Stand 294, Midrand.
23 13½ 3½ [40]
Please note: Your answer must comply with the requirements of International Financial Reporting Standards (IFRS). Accounting policy notes are not required. Ignore comparative information. Show all calculations. Round all amounts to the nearest Rand. Ignore VAT implications. Journal narrations are not required. No abbreviations for general ledger account names can be used.
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FAC3702/101 ANNEXURE D: ASSIGNMENT 02 FOR FAC3702 (COMPULSORY FOR SECOND SEMESTER REGISTRATION) ASSIGNMENT 02 WILL CONTRIBUTE 5% TOWARDS YOUR FINAL MARK.
SEMESTER 2 UNIQUE NUMBER:
873564
DUE DATE:
13 September 2018
PLEASE NOTE: 1. This assignment consists of 10 multiple choice questions. 2. This assignment covers learning units 1 to 4 of the study guide. 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 markreading sheet with, say, the unique number 103039, it identifies 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 a 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 (20 marks) (36 minutes) Questions 1 – 10 relate to the annual financial statements of Mshengu Taxis Ltd for the year ended 31 December 2017. Mshengu Taxis Ltd provides public transport services in the Limpopo area. The company has a 31 December year-end and prepares its financial statements in accordance with International Financial Reporting Standards (IFRS). The following information relates to the assets of the company: Operator’s licence On 15 December 2014, Mshengu Taxis Ltd acquired a public transport operator’s licence for R2 million, to enable the company to provide public transport services between Seshego and Giyani. This licence is valid for a period of ten years from 1 January 2015 to 31 December 2024, after which it would lapse without any residual value. This licence was both available for use, as intended by management, and brought into use on 1 January 2015. The operator’s licence was revalued for the first time on 1 January 2016. On this date, the fair value was determined to be R1 900 000 with reference to an active market. During the year ended 31 December 2017, the Department of Transport doubled the number of operator licences available on the active market, to improve the competition in the taxi industry. As a result of this, the fair value of these operator’s licences decreased significantly. The following information relating to Mshengu Taxis Ltd’s operator’s licence was obtained on 31 December 2017: Fair value Costs to sell Annual net cash inflows expected from the use of the operator’s licence for the period 1 January 2018 – 31 December 2024 Pre-tax discount rate
R1 200 000 R45 000 R200 000 12% per annum
Tracking software Mshengu Taxis Ltd embarked on a research and development project to develop the software for a taxi global positioning tracking system (GPS), called LiveView Tracker. This system will be operated centrally to enable real time monitoring of all taxi’s. Research commenced on 1 March 2016. On 31 October 2016, management was presented with sufficient information to indicate that all criteria for recognition of an internally generated intangible asset were met and the development of the system commenced. The development of LiveView Tracker was completed on 31 March 2017, and was available for use, as intended by management, on 1 April 2017. One permanently employed computer programming specialist, earning a monthly salary of R50 000 was full-time assigned to this project from the research phase until the completion thereof. Overhead costs, directly attributable to the LiveView Tracker, amounting to R81 250 was incurred evenly during the research and development phase of the project. Mshengu Taxis Ltd purchased a computer on 1 March 2016 at a cost of R25 000 for the research and development of the software. The computer has a useful life of 2 years and a residual value of R4 000 was allocated to it. The computer was available for use, as intended by management, on acquisition date and it was exclusively used for the research and development of the software from 1 March 2016 until 31 March 2017. From 1 April 2017 the computer will be used in the normal operating activities of the company.
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FAC3702/101 ASSIGNMENT 02 (continued) The computer programming specialist as well as the computer were exclusively used for the LiveView Tracker project during the research and development thereof. An estimated useful life of 3 years and a residual value of Rnil was allocated to the tracking software. Additional information: 1. It is the accounting policy of the company to account for intangible assets according to the revaluation model. On revaluation, accumulated amortisation is eliminated against the gross carrying amount of the asset. Amortisation is written off on a straight-line basis over its useful life based on the most recent revalued amount. Any revaluation surplus that arises realises with use of the asset. 2. It is the accounting policy of the company to account for property, plant and equipment according to the cost model and depreciation is accounted for in accordance with the straight-line method over the estimated useful lives of the assets. 3. The South African Revenue Service allows a 5% tax allowance on both the internally generated as well as the purchased intangible assets in terms of sections 11Gc of the Income Tax Act according to the straight-line method, not apportioned for a part of the year. 4. The South African normal tax rate is 28%. The capital gains inclusion rate is 80%. 5. The company provides for deferred tax on all temporary differences in accordance with the statement of financial position approach. There are no other items causing temporary differences or exempt differences except those identified in the question. The company will have sufficient taxable profit in future, against which any unused tax losses can be utilised. 6. The tracking software will not be revalued during the 2017 financial year due to the fact that the fair value could not be determined reliably. 7. Assume all amounts are material. Please note:
Amounts are to be rounded off to the nearest Rand. Ignore any VAT implications.
MULTIPLE CHOICE QUESTIONS: These questions can be answered online. Log onto myUnisa, choose the FAC3702 module tab and access the assignment tool. Click on the submit action next to assignment 02. Remember each question has only one correct answer.
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ASSIGNMENT 02 (continued) QUESTION 1 According to IAS 38, Intangible assets, the increase in the carrying amount of the operator’s licence on 1 January 2016, will be recognized in the annual financial statements of Mshengu Taxis Ltd, for the year ended 31 December 2016, as follows: (1) A revaluation surplus of R100 000 is recognized in other comprehensive income in the statement of profit or loss and other comprehensive income. (2) A revaluation surplus of R300 000 is recognized in profit or loss in the statement of profit or loss and other comprehensive income. (3) A revaluation surplus of R100 000 is recognized in profit or loss in the statement of profit or loss and other comprehensive income. (4) A revaluation surplus of R300 000 is recognized in other comprehensive income in the statement of profit or loss and other comprehensive income. (5) A revaluation deficit of R100 000 is recognized in profit or loss in the statement of profit or loss and other comprehensive income. (2) QUESTION 2 The carrying amount of the operator’s licence, that will be disclosed in the statement of financial position of Mshengu Taxis Ltd at year-end on 31 December 2017, according to the requirements of IAS 36, Impairment of assets and IAS 38, Intangible assets, amounts to: (1) (2) (3) (4) (5)
R993 528 R1 200 000 R1 155 000 R912 751 R1 477 889
(2)
QUESTION 3 The tax base of the operator’s licence of Mshengu Taxis Ltd, on 31 December 2017, amounts to: (1) (2) (3) (4) (5)
R1 800 000 R1 700 000 R1 691 667 R300 000 R200 000
(2)
QUESTION 4 The remaining useful life of the operator’s licence, as disclosed in the intangible asset note to the annual financial statements of Mshengu Taxis Ltd for the year ended 31 December 2017, according to the requirements of IAS 38, Intangible assets, is as follows: (1) (2) (3) (4) (5)
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6 years, 11 months 8 years 9 years 10 years 7 years
(2)
FAC3702/101 ASSIGNMENT 02 (continued) QUESTION 5 According to the requirements of IAS 38, Intangible assets, the salary costs of the computer programming specialist involved in the research and development of the tracking software, will be disclosed in the annual financial statements of Mshengu Taxis Ltd for the year ended 31 December 2016, as follows: (1) Salaries amounting to R400 000 will be expensed as research costs in the statement of profit or loss and other comprehensive income and salaries amounting to R100 000 will be capitalised as development costs of an internally generated intangible asset in the statement of financial position. (2) Salaries amounting to R400 000 will be expensed as research costs in the statement of profit or loss and other comprehensive income and salaries amounting to R350 000 will be capitalised as development costs of an internally generated intangible asset in the statement of financial position. (3) Salaries amounting to R500 000 will be expensed as research costs in the statement of profit or loss and other comprehensive income and salaries amounting to R250 000 will be capitalised as development costs of an internally generated intangible asset in the statement of financial position. (4) Salaries amounting to R500 000 will be capitalised as development costs of an internally generated intangible asset in the statement of financial position. (5) Salaries amounting to R500 000 will be expensed as research costs in the statement of profit or loss and other comprehensive income. (2) QUESTION 6 According to the requirements of IAS 38, Intangible assets, the directly attributable overhead costs relating to the research and development of the tracking software, will be disclosed in the annual financial statements of Mshengu Taxis Ltd for the year ended 31 December 2017, as follows: (1) Overhead costs amounting to R50 000 will be expensed as research costs in the statement of profit or loss and other comprehensive income and overhead costs amounting to R12 500 will be capitalised as development costs of an internally generated intangible asset in the statement of financial position. (2) Overhead costs amounting to R18 750 will be capitalised as development costs of an internally generated intangible asset in the statement of financial position. (3) Overhead costs amounting to R18 750 will be expensed as research costs in the statement of profit or loss and other comprehensive income. (4) Overhead costs amounting to R50 000 will be expensed as research costs in the statement of profit or loss and other comprehensive income and overhead costs amounting to R31 250 will be capitalised as development costs of an internally generated intangible asset in the statement of financial position. (5) Overhead costs amounting to R81 250 will be expensed as overhead costs in the statement of profit or loss and other comprehensive income. (2) QUESTION 7 According to the requirements of IAS 38, Intangible assets, the depreciation expense of the computer utilised during the research and development of the tracking software, will be disclosed in the annual financial statements of Mshengu Taxis Ltd, for the year ended 31 December 2016 and 31 December 2017 respectively, as follows: (1) 31 December 2016: R10 000 will be disclosed as depreciation in the statement of profit or loss and other comprehensive income and R2 500 will be disclosed as an internally generated intangible asset in the statement of financial position. 31 December 2017: R3 125 will be disclosed as an internally generated intangible asset in the statement of financial position.
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ASSIGNMENT 02 (continued) QUESTION 7 (continued) (2) 31 December 2016: R10 000 will be disclosed as research costs in the statement of profit or loss and other comprehensive income and R2 500 will be disclosed as an internally generated intangible asset in the statement of financial position. 31 December 2017: R3 125 will be disclosed as an internally generated intangible asset in the statement of financial position. (3) 31 December 2016: R7 000 will be disclosed as research costs in the statement of profit or loss and other comprehensive income and R1 750 will be disclosed as an internally generated intangible asset in the statement of financial position. 31 December 2017: R2 625 will be disclosed as an internally generated intangible asset in the statement of financial position. (4) 31 December 2016: R7 000 will be disclosed as depreciation in the statement of profit or loss and other comprehensive income and R1 750 will be disclosed as an internally generated intangible asset in the statement of financial position. 31 December 2017: R2 625 will be disclosed as an internally generated intangible asset in the statement of financial position. (5) 31 December 2016: R7 000 will be disclosed as research costs in the statement of profit or loss and other comprehensive income. 31 December 2017: R4 375 will be disclosed as an internally generated intangible asset in the statement of financial position. (2) QUESTION 8 According to IAS 36, Impairment of assets, an entity must, as a minimum, consider external as well as internal sources of information indicators in assessing whether assets are likely to be impaired. Which of the following constitutes internal sources of information? (a) (b) (c) (d) (e) (f)
Evidence that is available of obsolescence of, or physical damage to an asset; Observable indications that the asset’s value has declined significantly more than would be expected as a result of the passage of time or normal use; Evidence available from internal reporting that indicates that the economic performance of an asset is, or will be, worse than expected; Reassessing the useful life of an asset as finite rather than indefinite due to significant changes to the extent to which, or manner in which, an asset is used; The carrying amount of the net assets of the entity is more than its market capitalization; An identified plan exists to discontinue or restructure the operation to which an asset belongs.
The correct answer is: (1) (2) (3) (4) (5)
a, b, d and e only a, c and d only a, c, d and f only c, d and f only b, c and f only
(2)
QUESTION 9 According to IAS 36, Impairment of assets, which of the following statements regarding the recognition and measurement of an impairment loss, are correct: (a)
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When calculating an asset’s value in use projections of cash outflows incurred to generate cash inflows include those for the day-to-day servicing of the asset;
FAC3702/101 ASSIGNMENT 02 (continued) QUESTION 9 (continued) (b)
(c) (d)
(e)
When calculating an asset’s value in use future cash flows must be estimated for the asset in its current condition, including future capital expenditure that will improve or enhance the asset’s performance; The discount rate used to measure an asset’s value in use shall reflect risks for which the future cash flow estimates have been adjusted; The fair value of an asset reflects the assumptions that market participants would use when pricing the asset. Therefore, fair value does not reflect any legal rights or legal restrictions that are specific only to the current owner of the asset; An impairment loss on a revalued asset is always recognised as an expense in the profit or loss section of the statement of profit and loss and other comprehensive income irrespective if a revaluation surplus for that same asset exists.
The correct answer is: (1) (2) (3) (4) (5)
a, b and d only a and e only a, c and e only a and d only c and e only
(2)
QUESTION 10 According to IAS 36, Impairment of assets, which of the following statements regarding the reversal of an impairment loss, are correct: (a)
(b)
(c)
(d)
(e)
An impairment loss recognised in prior periods for an asset other than goodwill shall be reversed if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. A reversal of an impairment loss reflects an increase in the estimated service potential of an asset, either from use or from sale, since the date when the entity last recognised an impairment loss for that asset. An impairment loss can be reversed just due to the passage of time when the recoverable amount of the asset becomes higher than its carrying amount, because the present value of the future cash flows increases as time passes. The increased carrying amount of an asset attributable to a reversal of an impairment loss can exceed the carrying amount that would have been determined had no impairment loss been recognised for that asset in previous years. A reversal of an impairment loss of a revalued asset is recognised in other comprehensive income and increases the revaluation surplus for that asset.
The correct answer is: (1) (2) (3) (4) (5)
a and e only a, b, c and e only a, b and e only a, b, c, d and e only b and c only
(2)
Ref: / FAC3702_2018_TL_101_3_E.pdf © UNISA 2018
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