MARKING MEMORANDUM
Applied Financial Accounting
Module
AFAC02-6
(NQF LEVEL 6)
FORMATIVE ASSESSMENT – ASSIGNMENT
Assignment B (AFAC02-6/DLO6 12/2020)
Exam Date
Marks
14 December 2020
20
© Milpark Education Applied Financial Accounting AFAC02-6 Assignment B
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Assignment B (AFAC02-6/DLO6 12/2020)
Total: 20 marks
Note to student: You will be penalised for the copying of theory without
explanation/application to the scenario provided. You should use the theory in
support of your own answer. Non-application will result in a zero mark being
awarded.
SECTION A (20 MARKS) – PARAGRAPH QUESTIONS
Answer all of the following questions.
Question 1 (20 marks)
The following details relate to assets that were on the books of an entity at the
beginning of the financial year, 1 July 2019:
Asset class
Cost
Land and
R2 000 000
Accumulated
depreciation
R 60 000
buildings
Depreciation policy
Buildings: 5% straight line per
year; buildings account for 60%
of the total cost.
Vehicles
R
600 000
R150 000
25% reducing balance
Machinery
R
400 000
R 80 000
5 years: on the educing balance
method
The assets listed in the table above were purchased on 1 July 2018.
The following transactions took place during the year ended 30 June 2020, and
have not yet been taken into account:

On 30 March 2020, an old vehicle with a cost of R120 000 and
accumulated depreciation of R30 000 at 1 July 2019 was sold; R50 000
cash.

On 1 January 2020, a new machine was purchased; R150 000.

Depreciation still needs to be provided for all relevant assets.
© Milpark Education Applied Financial Accounting AFAC02-6 Assignment B
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Required:
Using the information provided, prepare the property, plant and equipment (PPE)
note to the financial statements as at 30 June 2020.
Note: feel free to use the template provided below; however, you will need to
reproduce it in your answer book. Also, be sure to show all your workings.
Land
and
Vehicles
Machinery
Total
buildings
Carrying amount (1 July 2019)
Cost
Accumulated depreciation
Additions at cost
Disposals (carrying value)
Depreciation
Carrying amount (30 June 2020)
Cost
Accumulated depreciation
(20)
ANSWER: (Topic 2: Depreciation)
Land and
Vehicles
Machinery
Total
buildings
Carrying amount (1
1 940 000
450 000
320 000
2 710 000
2 000 000
600 000
400 000
3 000 000
(60 000)
(150 000)
(80 000)
(290 000)
Additions
-
-
150 000
150 000
Disposals (carrying
-
(73 125)
-
(73 125)
July 2019)
Cost
Accumulated
depreciation
value)
© Milpark Education Applied Financial Accounting AFAC02-6 Assignment B
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Depreciation
(60 000)
(106 875)
(79 000)
1 880 000
270 000
391 000
Cost
2 000 000
480 000
550 000
3 030 000
Accumulated
(120 000)
(210 000)
(159 000)
(489 000)
Carrying amount (30
(245 875)
2 541 000
June 2020
depreciation
Buildings = 0.05 x R2 000 000*0.6 = R60 000
Vehicles:
Old vehicles not sold = 0.25 x (450 000-90 000) = R90 000
Old vehicle sold = 0.25 x (R120 000 – 30 000) x 9/12 = R16 875
Machinery:
Old machines = 0.20 x (R400 000 – 80 000) = R64 000
New machine = 0.20 x R150 000 x 6/12 = R15 000
Asset disposal
30 March
Vehicles
120 000
2020
30 Mar
Accumulated
2020
depreciation –
46 875
Vehicles
Bank
50 000
Profit and loss
23 125
account
120 000
120 000
TOTAL MARKS: 20
© Milpark Education Applied Financial Accounting AFAC02-6 Assignment B
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