QUESTION 3
[25 MARKS]
[45 MINUTES]
Lion Limited (Lion) is a large industrial company. The following information relates to
the company’s property, plant, and equipment. The company has a
31 December year-end.
Plant form part of the property plant and equipment in the books of Lion and are
accounted for in terms of the revaluation model of IAS 16 property, plant, and
equipment and are depreciated over their useful lives of five years according to the
straight-line method taking their residual values into account. The gross replacement
method is applied when accounting for revaluation of the plant and revaluation is
transferred to the retained earnings as the asset is used.
The plant was purchased on 01 January 2022 at a total cost of R3.5 million and was
available for use on the same day. The useful life was estimated to be five years and
remained unchanged.
The fair values for the plant were provided to you as follows:
DATE
FAIR VALUE
31 DECEMBER 2022
R3 300 000
31 DECEMBER 2023
R2 000 000
31 DECEMBER 2024
R1 600 000
REQUIRED
(a)
Marks
Prepare relevant extracts from the:



Statement of comprehensive income for the period ended
31 December 2024
Statement of changes in equity for the period ended
31 December 2024
Statement of financial position as at 31 December 2024
Comparatives are not required
TOTAL MARKS
7
10
8
25