GROUP ASSIGNMENTS DUE

DATE 13 MARCH 2021

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matutej@staff.msu.ac.zw

GROUP 1 [30 MARKS]

Set out journal entries and supporting calculations to show how the principles of
IAS 16 Property Plant and Equipment should be applied in accounting for the
transaction described in the last question under IAS 16 slides.

GROUP 2 [30marks]
‘The conceptual framework is a coherent system of interrelated objectives and
fundamentals that is expected to lead to consistent standards and that prescribes the
nature, function, and limits of financial accounting and reporting. It is expected to
serve the public interest by providing structure and direction to financial
accounting and reporting to facilitate the provision of even-handed financial and
related information that is useful in assisting capital and other markets to function
efficiently in allocating scarce resources in the economy.’

Required

With reference to the statement:

a. Discuss the objective of financial statements.
b. Discuss the need for the development of a conceptual (accounting) framework.
c. Discuss the qualitative characteristics of Financial Information
d. Give definitions’ of elements of financial statements
e. Discuss the users of Financial information and their needs.

GROUP 3 [ 30 MARKS]
a What is the objective of IFRS 15
b Outline and explain the five step model giving examples

GROUP 4 [30 MARKS]

The following information relate to the financial statements of Matute Ltd for the year ending 31
December 2019.

(a) A rights issue was made on 1 February 2020 to finance the acquisition and furnishing of
office buildings. The full issue of $1 200 00 (for $12 per share) was taken up. The
directors concluded an “option to purchase” in respect of office building during the
October 2019. The rights issue was approved by the directors on 15 November 2019.
(b) An invoice dated 27 December 2019 for $60 000 was received from Matiki Ltd and
included in creditors at the statement of position date. Goods listed on the invoice were
delivered on 04 January 2020 and are included in the inventory figure at $60 000 at the
statement of financial position date. A positive creditor’s circulation was carried out and
the Directors of Matiki Ltd confirmed the amount outstanding on 31 December 2019.
However, the invoice from Matiki Ltd contain a calculation error and the correct amount
for the goods should infact be $80 000.

Additional information

Authorised share capital

$
1 000 000 Ordinary Shares of $1 each 1 000 000
Issued Share Capital
600 000 Ordinary Share of $1 each 600 000
Purchasing price and furnishing costs of office buildings are estimated by the board of directors
at $ 1 200 000.
Assume a tax rate of 40% and the company provides for deferred tax comprehensively on the
statement of financial position method.

You are required to:-

a) Identify each post balance sheet event as adjusting or non-adjusting

b) Briefly discuss the effects of the above mentioned event on the financial statements at
31 December 2019
c) Provide an extract from the financial statements of Nokutenda Ltd at 31 December 2019,
disclosing the results of the discussion in b above so as to comply with IAS 10

XYZ LIMITED

Independent limited declared a final dividend of $0.15 per ordinary share on 13 April 2019 in
respect of the financial year ended 31 March 2019. The accountant, Mr Poll has recorded the
dividend as an expense on the statement of comprehensive income and credited it to a dividend
liability in the statement of financial position for the year ended 31 March 2019.

The financial statements have not been finalized.

Required:

e) Discuss the treatment of the dividend declaration with reference to IAS 10, providing an
alternative treatment where appropriate

GROUP 5 [30 MARKS]

a ) Discuss giving reasons how the following has to be treated according to IAS 37.
Tabular your work in three columns i.e transaction, recognize provision, reason.

1) Onerous contracts
2) Major overhaul/ repairs
3) Staff retraining for recent tax changes
4) Constructive obligation
5) Leave pay provision
 6) Customer refunds
7) Customer refunds
8) Warranties
9) Restructuring by sale of an operation
10) Restructuring by closure or reorganization

b ) Define the terms, provisions, contingent liabilities, contingent assets and outline
how each is to be recognized according to IAS 37.

END OF ASSIGNMENT