POLYTECHNIC OF NAMIBIA
FACULTY OF MANAGEMENT SCIENCES
DEPARTMENT OF ACCOUNTING, ECONOMICS AND FINANCE
DIPLOMA IN ACCOUNTING AND FINANCE (DAPF)
FINANCIAL ACCOUNTING 201 (FAC 611S)
TEST 2
QUESTION PAPER
Date:
24 April 2015
Duration:
2 hours
Total Marks:
50
INSTRUCTIONS / NOTES
1. This test paper is made up of two Questions
2. Answer both questions in black or blue ink
3. Start each question on a new page in your answer script and show all your
workings
4. Questions relating to this paper may be raised in the initial 30 minutes after
the start of the paper. Thereafter, candidates must use their initiative to deal
with any perceived error or ambiguities and any assumption made by the
candidate should be clearly stated.
5. This paper consists of 5 pages including the cover page
EXAMINERS: E.Mushonga, M. Dikuua, C. Mahindi & A. Makosa
MODERATOR: P. Maliti
1
Question 1
You have been appointed the accountant of Degree (Pty) Ltd. The previous
accountant had already started finalising the statements of Degree (Pty) Ltd for the
year ended 31 December 2014.
The competent assistant accountant prepared the following information for purposes
of preparing the statement of financial position.
1. The following balances in respect of assets, liabilities and equity were
obtained, as at 31 December 2014.
Land
Buildings (at cost)
Plant & equipment
Accumulated depreciation - buildings
Accumulated depreciation - plant & equipment
Investments
Trade inventories
Trade receivables
Allowance for doubtful debts
Office supplies on hand (31 Dec 2014)
Insurance prepaid (31 Dec 2014)
Provisional tax payments
Term deposit (term elapses 31 Apr 2015)
Bank (favourable)
Ordinary share capital
Retained earnings
Mortgage bond
Finance lease loan
Trade payables
Rent received in advance
VAT Control account
Income tax payable
Shareholders for dividends
Short term provisions
Note
2
2
2, 4
2
5
3
6
7
4
8
N$
1,750,000.00
8,700,000.00
7,500,000.00
3,045,000.00
2,400,000.00
2,250,000.00
5,110,000.00
15,985,000.00
1,910,000.00
850,000.00
1,000,000.00
1,980,000.00
215,000.00
1,650,000.00
12,000,000.00
8,015,000.00
7,275,180.00
1,506,794.00
3,922,078.00
96,000.00
(519,948.00)
2,150,000.00
2,000,000.00
1,250,000.00
2. The cost price and accumulated depreciation of property, plant and equipment
had been correctly accounted for in the trial balance.
2
3. Included in the statement of profit or loss for the reporting period ended 31
December 2014, is a write-down of the cost price of certain inventory items to
the net realisable value thereof. The write down of N$860 000 has not been
accounted for in the above list of balances.
4. On 2 January 2014 a plant item was acquired by means of a loan. The useful
life of the item is six years. (This plant item has already been appropriately
recognised).
The following portion of the repayment schedule is applicable:
INSTALMENT
Total
Capital
Date
N$
02/01/2014
31/12/2014
31/12/2015
31/12/2016
Loan
Instalment 1
Instalment 2
Instalment 3
N$
473 206
473 206
473 206
293 206
322 527
354 779
Interest
per year
at 10%
per year
N$
180 000
150 679
118 427
Capital
amount
outstanding
N$
1 800 000
1 506 794
1 184 267
829 488
5. The investments were purchased during 2011 at a cost price of N$1 500 000.
6. At 31 December 2014, Degree Ltd increased the allowance for bad debts by
N$40 000. This has not yet been taken into account.
7. The Mortgage bond was incurred on 2 January 2008 to finance the acquisition
of the property and is repayable in 20 equal instalments, which repays the
capital and the interest. The following portion of the repayment schedule is
applicable:
INSTALMENT
Total
Capital
Date
N$
02/01/2008
02/01/200802/01/2013
31/12/2014
31/12/2015
Loan
Instalment 1
to 6
Instalment 7
Instalment 8
N$
Interest
per year
at 10%
per year
N$
Capital
amount
outstanding
5 258 400 589 473
4 668 927
N$
8 000 000
7 410 527
876 400
876 400
741 053
727 518
7 275 180
7 126 298
135 347
148 882
8. On 31 May 2013, Degree (Pty) Ltd was sued by the local authority for alleged
environmental pollution for an amount of N$1 250 000.
3
Required:
Present the above mentioned information in the statement of financial position of
Degree (Pty) Ltd as at 31 December 2014 to comply with International Financial
Reporting Standards. A summary of significant accounting policies is also required.
4
Question 2
The register for property, plant & equipment of Dijkman (Pty) Ltd is presented to you.
As the accountant you are required to prepare all the entries and calculations, and
satisfy all disclosure requirements regarding property, plant & equipment in the
financial statements of the company for the financial year ended 30 June 20.5.
A summary of the register of property, plant and equipment at 1 July 20.4 is as
follows:
N$
Furniture:
Cost
Accumulated depreciation
22 000
8 000
Motor vehicles:
Cost
Accumulated depreciation
60 000
31 000
Machinery:
Cost:
Machine A
Machine B
Machine C
Accumulated depreciation:
Machine A
Machine B
Machine C
15 000
63 000
18 000
7 000
3 000
Land:
Cost
150 000
Additional information:
1. The following rates and methods of depreciation are applicable:
 Property, plant and equipment are accounted for on the cost model.
 Land – no depreciation
 Furniture – 10% straight line
 Motor vehicles – 20% straight line
 Machinery – 20% reducing balance method
 The assets have no residual values.
5
2. On 31 December 20.4 a delivery vehicle with an original cost of N$18 000
was sold for N$7 500 and this amount was credited to the motor vehicle
account. On 1 July 20.4 the accumulated depreciation of the vehicle
amounted to N$11 000.
3. Machine B was obtained and put into operation on 30 June 20.4.
4. Land consists of stand no.65 in the northern industrial area and was
purchased in 20.0. The board of directors estimated the current market value
of the property to be N$200 000 at 30 June 20.5. The land is not classified as
an investment property.
5. The current market value of the other assets does not differ materially from
their carrying amounts.
6. No other transactions relating to property, plant & equipment took place
during the year.
YOU ARE REQUIRED TO:
Disclose the property, plant and equipment in the statement of financial position and
in the notes to the financial statements of Dijkman (Pty) Ltd for the year ended 30
June 20.5 so as to comply with IAS 16.
(30 marks)
END OF PAPER
6
Degree (Pty) Ltd
Statement of Financial Position as at 31 December 2014
N$
Marks Working
ASSETS
Non-current assets
Property Plant and equipment
Investment in NSX listed shares
Total non-current assets
12 505 000.00
2 250 000.00
14 755 000.00
√√√
√
Current assets
Inventories (5110000-860000)
Trade receivables (15985000-1950000)
Other curent assets (850000+1000000)
Other financial investments
Cash and cash equivalents
Total current assets
4 250 000.00
14 035 000.00
1 850 000.00
215 000.00
1 650 000.00
22 000 000.00
√√
√√
√√
√
√
Total Assets
36 755 000.00
EQUITY AND LIABILITIES
Equity
Share capital
Retained Earnings
Total Equity
12 000 000.00
8 015 000.00
20 015 000.00
√
√
8 310 565.00
√√
4 538 026.00
√√√
471 409.00
170 000.00
2 000 000.00
1 250 000.00
8 429 435.00
√√
√√
√
√
Non-current liabilities
Long term borrowings (1184267+7126298)
Current liabilities
Trade and other payables (3922078+96000+519948)
Current portion of long-term borrowings
(322527+148882)
Current Tax payable (2150000-1980000)
Shareholders for dividends
Short-term provisions
Total Equity and liabilities
36 755 000.00
Total Marks =25/25 *20
Workings
7
1
Cost
1)
Acc Dep
Property Plant and Equipment
Land
1 750 000
Buildings
8 700 000
Plant & Equipment
7 500 000
Carrying amount
12 505 000
1 750 000
5 655 000
5 100 000
3 045 000
2 400 000
QUESTION 2– PROPERTY, PLANT & EQUIPMENT SOLUTION
STATEMENT OF FINANCIAL POSITION OF DIJKMAN (PTY) LTD AS AT 30
JUNE 20.5 
Note
N$
2
244 200 
ASSETS:
Non-current assets:
Property, plant and equipment

NOTES TO THE ANNUAL FINANCIAL STATEMENTS OF DIJKMAN (PTY) LTD
FOR THE YEAR ENDED 30 JUNE 20.5 
1. Accounting policy
1.1 Property, plant and equipment 
Property, plant and equipment are stated at cost less accumulated
depreciation, except for land which is not depreciated, and which is carried at
cost.  The remaining assets are depreciated according to the following rates
and methods:
 Furniture at 10% according to the straight-line method
 Motor vehicles at 20% according to the straight-line method
 Machinery at 20% according to the reducing balance method

8
√
√
√
2. Property, plant and equipment
Land
Furniture
Motor vehicles
Machinery
Total
COST:
Cost at 1 July 20.4
150 000
22 000
60 000
96 000
-
-
(18 000)
-
150 000
22 000
42 000
96 000
310 000 2.5
Accumulated depreciation at 1 July 20.4
-
8 000
31 000
10 000
49 000 2.5
Disposal
-
(12 800)
-
(12 800) 2
Charge for the year
-
2 200
10 200
17 200
29 600 5
Accumulated depreciation at 30 June 20.5
-
10 200
28 400
27 200
65 800 2.5
Carrying amount at 1 July 20.4
150 000
14 000
29 000
86 000
279 000 2.5
Carrying amount at 30 June 20.5
150 000
11 800
13 600
68 800
244 200 2.5
Disposals
Cost at 30 June 20.5
328 000 2.5
(18 000) 1
DEPRECIATION:
-
9