DEPARTMENT OF ACCOUNTANCY

ACCOUNTING 300 / S3BCTQ2

FINAL SUPPLEMENTARY ASSESSMENT OPPORTUNITY

January 2020

INFORMATION

ASSESSORS: MS A GAZI-BABANA (UJ) MS Y KULIK (UJ)

MS E DU TOIT (NUST) MS M COETZER (UJ)
MR K TRIEGAARDT (BDO)

MODERATORS: PROF A MOHAMMADALI-HAJI (UJ)

MS W TERBLANCHE (UFH)

READING TIME: 37 MINUTES

WRITING TIME: 188 MINUTES

MARKS: 125

 THE INFORMATION CONSISTS OF 10 PAGES AND 3 QUESTIONS (front page included).

 SILENT NON-PROGRAMMABLE CALCULATORS ARE ALLOWED.
 SHOW ALL CALCULATIONS.
 START EVERY PART TO A QUESTION AT THE TOP OF A PAGE.
 IF PENCIL OR TIPPEX OR ERASABLE PENS WERE USED ON THE ANSWER SHEET, IT DOES NOT
QUALIFY FOR REMARKING.
 SCRATCH OUT OPEN SPACES AND EMPTY PAGES.
 THIS IS AN OPEN BOOK ASSESSMENT – ALL FIVE VOLUMES OF ‘A Guide Through IFRS’ AND THE
SEPARATE ‘Conceptual Framework’ MAY BE USED DURING THE ASSESSMENT, AS WELL AS
OFFICIAL COPIES OF STANDARDS AND ILLUSTRATIVE EXAMPLES ISSUED BY THE IASB.
BOOKS AND OTHER INFORMATION MAY ONLY BE FLAGGED, HIGHLIGHTED AND UNDERLINED;
NO WRITING MAY BE ON THE PAGES. NO OTHER MATERIAL IS PERMITTED.
COURSE: ACCOUNTANCY 300 / S3BCTQ2
SASS6-Q1-2019

QUESTION 1 (40 MARKS)

Phuza Limited (hereafter “Phuza”) is a listed company that was initially incorporated by a group
of varsity friends who wanted to run it as a venture on the side while they completed their
articles. Phuza has since grown and become a great contributor to job creation in the country.
Their core activities are producing energy drinks and other non-alcoholic beverages for retail
stores. The production process follows strict guidelines and quality standards to ensure that
only the best beverages are produced. Phuza has a 28 February reporting period.

The tax division of the company has been under a lot of strain as they are understaffed and
have thus contracted you to assist them with your expertise in financial accounting and
taxation matters.

The profit before tax for the 2018 financial year end is R15 000 000.

The following items are included in the profit before tax for the year ended 28 February 2018,
and were correctly accounted for:

1) Depreciation on property of R 1 200 000 for the year. The property has been fully
written off for tax purposes.

2) The machinery used in the bottling of the energy drinks was purchased on
31 August 2014 for R 1 200 000, and became available for use on that day. At that
date the expected useful life of the machine was 10 years and the residual value was
estimated to be zero.

The machinery was subsequently disposed of on 1 September 2017 at a loss of

R 150 000. A replacement machine from Japan has been ordered but has not been
received yet.

3) Phuza has numerous investment properties in Zimbabwe. Rental income of

R 120 000 from the properties was earned during the financial period. Only R 20 000
of this amount will be taxed in South Africa in terms of a double taxation agreement
between South Africa and Zimbabwe.

4) Phuza pays its rental expenses 3 months in advance. The following balances appeared
on the face of the statement of financial position in relation to the rent:
R 570 000 (2018)
R 330 000 (2017)

5) Due to the staffing problems of Phuza, the provisional tax return was filed 19 days after
the deadline for filing. A penalty of R 15 000 was charged by SARS.

6) Dividends relating to JSE listed investments of R1 200 000 were earned for the year
ended 28 February 2018.

2
COURSE: ACCOUNTANCY 300 / S3BCTQ2
SASS6-Q1-2019

QUESTION 1 continued

The following items are NOT included in the profit before tax for the year ended
28 February 2018, and should still be accounted for:

1) Phuza received a special order of 10 000 energy drinks from Wellington Traders on
25 February 2018. The selling price of each unit is R25, whilst the cost to produce each
unit is R15. An amount of R 250 000 being the full revenue from the order was
deposited into the business account on the date of the order, while delivery only took
place on 13 March 2018.

2) Phuza purchased and installed a state-of-the-art bottling plant on 1 March 2014.

At that date the estimated total useful life of the plant was 15 years, with no residual
value. The plant was purchased for R10 million and was available for use on
1 March 2013. Environmental legislation requires Phuza to dismantle the plant at the
end of it’s useful life. On 1 March 2013 the total costs necessary to dismantle and
restore the environment is expected to amount to R2 million when paid.
A pre-tax discount rate of 15% per annum is applicable.

On 1 March 2017 management assessed that the remaining useful life of the plant has
decreased to 9 years as the demand for the energy drinks has increased unexpectedly,
resulting in the plant being utilised for longer hours than what management originally
estimated. This decision has not been accounted for. The estimates of the future
dismantling costs and the pre-tax discount rates remained unchanged.

Other matters for noting:

1) A total of R 32 000 in foreign taxes were paid during the financial period on foreign
transactions (including the tax on the R100 000 rental income not taxed in South
Africa).

2) The company recognised a deferred tax asset in respect of tax losses of R2 500 000
for the year ended 28 February 2017.

3
COURSE: ACCOUNTANCY 300 / S3BCTQ2
SASS6-Q1-2019

QUESTION 1 continued

Additional information:

Accounting Policies

 Property, plant and equipment is accounted for using the cost model of IAS 16 Property,
Plant and Equipment and is depreciated using a straight-line method over the expected
useful life of the asset.

 The company will have sufficient taxable profit in future against which any unused tax
losses can be utilised and recognises deferred tax assets in full on tax losses.

Guidance on SARS allowances

 Unapportioned Section 12C allowances of 20% is received on all the machinery and plant.
Provisions for dismantling costs capitalised for accounting purposes are excluded from the
costs of the related assets for the purposes of calculating Section 12C allowances.

 Deductions on all amounts provided for will only be granted on the payment date.

 SARS includes all other income and allows a deduction of all other expenses at the earliest
of receipt or accrual.

 Assume a tax rate of 28% and a capital gains tax inclusion rate of 80%.

4
COURSE: ACCOUNTANCY 300 / S3BCTQ2
SASS6-Q2-2019

QUESTION 2 (45 MARKS)

Background

Lingelihle Sithole established All-Things-Dairy (Pty) Limited (hereafter “All-Things-Dairy” or

“the company”), a dairy farm based in Kokstad, a small town on the border of Kwa-Zulu Natal
and the Eastern Cape. All-Things-Dairy has a 31 December financial reporting date and
complies with International Financial Reporting Standards (IFRS).

All-Things-Dairy is a fully integrated farm, not only producing milk but also electrical energy by
using sun and wind energy. It also grows its own lucerne grass that is used to feed the dairy
cows.

Investment in Dewfresh Dairy Limited

Dewfresh Dairy Limited (hereafter “Dewfresh”) is a chain of small dairy farms and factories in
the Western Cape, which will help broaden the group’s presence in South Africa. Dewfresh is
a well-established, diverse company and also owns various properties in the northern parts of
South Africa that it frequently rents out to third parties.

All-things-Diary purchased a controlling interest of 60% in the ordinary shares of Dewfresh on

1 January 2019 for the following consideration:

 Cash payment of R3 800 000 on the acquisition date;

 A second cash payment of R4 260 000 that must be made on 1 January 2021; and
 Twenty small-batch pasteurisation machines with the individual carrying amounts of
R20 000 each, that can be purchased on the open market for R25 700 each.
All assets and liabilities were considered to be fairly valued at the acquisition date with the
exception of the following assets and liabilities:

 A milk skimmer with a carrying amount of R155 000 (with a remaining useful life of 5 years
and no residual value) had a fair value of R210 000. The pasteuriser was subsequently
sold by Dewfresh to Ms Willow Valley, an unrelated third party, on 1 April 2019. Dewfresh
recognised a profit of R 47 000 on the disposal.

 Investment property with a carrying amount of R980 000 is considered to be undervalued

by R300 000. On 31 December 2019 this property’s fair value remained unchanged.

 A dairy factory that was purchased for R2 500 000 on 1 January 2013, and was classified
as an asset held for sale by Dewfresh at the end of 2018. On the date of acquisition, the
dairy factory had a carrying amount of R1 900 000, and a fair value of R3 250 000, with
costs to sell estimated to be R250 000. SARS grants an unapportioned allowance of 20%
per annum on the factory. On 1 January 2019, the factory had a tax base of R1 500 000.
The factory’s fair value less cost to sell was R3 100 000 on 31 December 2019.
Management remains committed to its plan to sell the factory, and it is anticipated that
the sale will be finalised in February 2020.

 The employee benefit liability recorded at R300 000, is undervalued by R50 000.
Dewfresh did not make any adjustments in its separate financial statements for these matters
on 1 January 2019, but accounted for these items correctly in its separate financial statements
for the year ended December 2019.

5
COURSE: ACCOUNTANCY 300 / S3BCTQ2
SASS6-Q2-2019

QUESTION 2 continued

Investment in MJ’s Ice Cream Emporium Limited

MJ’s Ice Cream Emporium Limited (hereafter “MJ’s”) is a popular ice cream factory and
distributor across South Africa that was established in 2009. Dewfresh is the sole supplier of
milk to MJ’s, and purchased a controlling interest of 70% in MJ’s on 1 January 2016 for a cash
consideration of R2 570 000. On the acquisition date, the retained earnings and share capital
of MJ’s was R800 000 and R985 000, respectively.

All assets and liabilities were considered to be fairly valued at the acquisition date with the
exception of the following:

 Inventory with a carrying amount of R260 000 was valued at R282 000. This inventory
was sold during the 2016 financial year.
MJ’s did not make any adjustments in its separate financial statements for these matters.

Dewfresh continued to be the sole supplier of the milk to MJ’s after the acquisition had taken
place. Dewfresh has a mark-up on cost of 20% for all sales of milk to external parties, however,
grants MJ’s a discount of 2% of the normal selling price. The value of the milk supplied to MJ’s
amounted to R700 000 and R950 000 for 2018 and 2019 respectively. The remaining milk
supplies on hand at year end is valued at R30 500 (2018: R10 700).

Investment in Solargen Power (Pty) Limited

All-T hings-Dairy purchased 45% of interest in Solargen Power (Pty) Limited (hereafter
“Solargen”) on 1 January 2017 for a cash consideration of R1 750 000. All-Things-Dairy was
able to exercise significant influence over Solargen from the purchase date onwards. Solargen
is an electrical contractor based in Kwa-Zulu Natal, specialising in electrical installations, solar
panel installation and servicing, solar photovoltaics, and inspection and testing of existing
installations. Solargen has grown significantly since its incorporation in 2010, due to the
increase in demand for sustainable energy. However, Solargen experienced a decline in
profits due to poor economic times, which resulted in a loss for being reported for 2019.

Solargen’s net asset value on the acquisition date of R 2 640 000 (including retained earnings
of R1 560 000) was considered to be fairly valued except for the following asset:

 Solargen is designing a new generation of solar panels, and the project is currently in the
development phase. The designs have a fair value of R120 000 (calculated using
valuation model based on observable inputs only). The design will have an indefinite
useful life.
Solargen did not make any adjustments in its separate financial statements for the at
acquisition matter.

All-Things-Dairy bought ten solar panels from Solargen on the date of acquisition for R41 900
each. Solargen aims to achieve a gross profit percentage of 25% on the sales value of
inventory sold. The solar panels have a useful life of 10 years and a residual value of R5 000
each.

6
COURSE: ACCOUNTANCY 300 / S3BCTQ2
SASS6-Q2-2019

QUESTION 2 continued

Extracts from the trial balances of group companies as at 31 December 2019:

All-Things- Dewfresh MJ’s Ice Solargen

Dairy Dairy Cream
Emporium
Share capital R15 000 000 R3 567 000 R985 000 R1 080 000
Retained earnings R4 500 000 R2 400 000 R1 300 000 R1 980 000
at 1 January 2019
Profit after tax R1 270 000 R1 200 000 R390 000 (R120 000)
Inventory R910 400 R310 400 R50 600 R530 000
Equipment R5 890 000 R2 900 400 R610 000 R2 100 000

Additional Information

 All-Things-Dairy and Dewfresh paid dividends of R 350 000 and R 175 000 respectively
during the current financial period.
 Assume that the time value of money, pre-tax interest rate is 6.47%.
 All-Things-Dairy measures non-controlling interests at the acquisition date at their
proportionate share of the acquiree’s identifiable net assets.
 The group has determined that, where applicable, sufficient taxable profit will be available
in future against which unused tax losses can be utilised.
 Property, plant and equipment is accounted for using the cost model of IAS 16 Property,
Plant and Equipment and is depreciated using a straight-line method for All-Things-Dairy
and all entities within the group.
 Intangible assets are accounted for using the cost model of IAS 38 Intangible Assets and
are amortised using a straight-line method for All-Things-Dairy and all entities within the
group.
 Investment property is accounted for using the fair value model of IAS 40 Investment
Property for All-Things-Dairy and all entities within the group.
 All-Things-Dairy has not impaired any goodwill recognised on acquisition of any of the
group companies.
 Assume a tax rate of 28% and a capital gains tax inclusion rate of 80%.

 You may ignore any VAT implications.

7
COURSE: ACCOUNTANCY 300 / S3BCTQ2
SASS6-Q3-2019

QUESTION 3 (40 MARKS)

This question is a continuation of the All-Things-Dairy (Pty) Limited scenario; for the purposes
of this question you may assume that all matters noted in question 2 have been correctly
accounted for in the information provided below, i.e. you do not need to update this question
for the matters noted in question 2.

All-Things-Dairy negotiated a 12-month supply contract with a large chain of supermarkets,

Check n Pay (hereafter “CnP”), in August 2018. CnP would like to purchase pasteurised milk
in bulk from All-Things-Dairy, which they will repackage in store branded, long-life containers
to provide a “store name” milk alternative for customers to purchase.

The terms of the contract is as follows:

- All-Things-Dairy will deliver 30,000 litres of milk to CnP factory on a weekly basis over
the 52 week contract period, commencing on 5 November 2018;
- All-Things-Dairy will invoice CnP in arrears on a quarterly basis for all milk deliveries
made during the quarter (3-month period);
- Deliveries will be priced on a cost-plus model and each invoice has to be supported by
a cost report prepared by All-Things-Dairy’s accountant, on which a mark-up of 20%
will be added to the actual costs incurred for the quarter;
- CnP has a one-week right to return a full, 30,000 litre milk delivery, should the quality
of the produce be lacking based on CnP’s own internal quality control processes;

The following cost report has been prepared by the accountant for the two-months ended
31 December 2018:

Cost per Total costs for 8-week period:

litre 5 Nov 2018 to 30 Dec 2018
Total litres delivered 240 000 litres
R
Direct production costs 3.80 912 000
Direct overheads 1.00 240 000
Indirect overheads (normal production) 120 000
Total costs 1 272 000 *
* Costs for final delivery in the last week of
December: R159 000

Forward exchange contracts

To supplement the farm’s milk production, All-Things-Dairy have decided to import milk from
farms in Europe. European milk prices are incredibly competitive based on South African
production data. All-Things-Dairy needs additional raw milk to keep its existing customers
satisfied, after entering into the CnP sales agreement.

Lingelihle’s cousin studied accounting at University, and recommended that All-Things-Dairy

should negotiate forward exchange contracts (FECs) from their banking partner, to manage
the risk associated with foreign exchange rates fluctuating over the 12-month CnP contract
period.

8
COURSE: ACCOUNTANCY 300 / S3BCTQ2
SASS6-Q3-2019

QUESTION 3 continued

Based on import forecasts over the coming 12-months, All-Things-Dairy negotiated the
following FECs with their banking partner on 1 November 2018 that will all be net-settled on
the respective maturity dates. All-Things-Dairy were not charged any additional fees when
these FECs were negotiated:

Description Maturity date FEC Euro Value Forward 1Euro:Rand?

exchange rate
2-month FEC 31 December 2018 50 000 16.30
12-month FEC 31 October 2019 250 000 16.08

The following relevant spot and forward exchange rates were obtained from the bank:

Date 1 Nov 2018 31 Dec 2018 31 Oct 2019

1Euro = Rand? 1Euro = Rand? 1Euro = Rand?

Spot rate 16.42 16.47 16.60

2-month FEC 16.30 16.41 16.54
10-month FEC 16.11 16.18 16.41
12-month FEC 16.08 16.14 16.38

Debentures issued

All-Things-Dairy has to purchase a new pasteurisation machine for the dairy operations in the
Eastern Cape, in light of the increased production needs. The machine costs R260,000 and
is accounted for using the cost model under IAS 16 Property, plant and equipment.
The machine is depreciated over a useful life of four years to a zero residual value.

In order to fund the purchase of the machine, All-Things-Dairy issued the following debentures
to friends and family of Lingelihle Sithole (business owner) on 1 February 2019, and
immediately utilised the funds to purchase the machine and brought it into use on this date.
The terms of the debentures are as follows:

- 2 000 R150 10% debentures were issued at face value (fair value). These debentures
may be converted in two years’ time into 5 ordinary shares for each debenture held at
the option of the holder. If they are redeemed in cash, All-Things-Dairy will redeemed
the instruments at a premium of 10% on the face value. Returns on these instruments
will be paid to debenture holders on a quarterly basis, as the invoices on the CnP
supply contract is settled.

A market related return for debentures with no conversion option is 15.5%.

9
COURSE: ACCOUNTANCY 300 / S3BCTQ2
SASS6-Q3-2019

QUESTION 3 continued

Investments made

All-Things-Dairy are generating additional cash flows from selling any excess (unutilised)
electricity generated by the solar and wind power generators to neighbouring farms.
The demand for alternative energy by the farmers has increased, because traditional electricity
supply is being interrupted with increasing regularity. This is negatively affecting production
on dairy farms, as they are highly dependent on electricity to efficiently milk cows.

Lingelihle’s resourceful cousin suggested that the company make the following investments,
as the returns on offer are higher than what the company can earn from leaving the money in
a cash account at the bank.

All investments were made on 1 July 2019 and acquired at fair value.

- R100 000 was invested in a 5-year SANRAL bonds yielding a return of 8.25% per
annum on the date that the bonds are issued. These funds may not be withdrawn
during the investment period, and will only be returned to All-Things-Dairy at the end
of the investment period, and all returns are re-invested (i.e. the principal and interest
earned over the five-year period will only be returned at the end of the five-year period).
All-Things-Dairy intends to hold these bonds until they mature.

SANRAL has been in the news often, as the recoverability of a significant portion of
their debtors balances that arise from eTolls levied on Gauteng’s major highways is
being drawn into question. eToll users are refusing to pay the outstanding debt owed
to SANRAL, and SANRAL will need to recover these debtor balances to continue
funding their obligations in respect of these bonds. All-Things-Dairy did not consider
this when they initially acquired the bonds. At 31 December 2019, it is estimated that
excepted credit losses (ECLs) based on 12-month expected loss events is 10% of the
carrying amount of the bonds, and the ECLs based on life-time expected loss events
is 30%.

- R150 000 was used to purchase a variety of listed South African shares using a share
brokering service (an investment company). This investment company charges 2% of
the initial investment amount as a fee for managing the investments.

All-Things-Dairy have elected to present all fair value movements on these shares in
other comprehensive income, as it is a long-term strategic investment in equity.

An investment statement was received at 31 December 2019, indicating the following

transactions:
- R10 000 dividend income was received on the shares and re-invested, by
purchasing additional shares. No transaction costs are incurred when dividends
are re-invested; and
- The total investment portfolio was valued at R168,500 on 31 December 2019.

Additional Information:

You may ignore income taxation, deferred tax and VAT for purposes of this question.

10
 DEPARTMENT OF ACCOUNTANCY

ACCOUNTING 300 / S3BCTQ2

FINAL SUPPLEMENTARY ASSESSMENT OPPORTUNITY

January 2020

REQUIRED

ASSESSORS: MS A GAZI-BABANA (UJ) MS Y KULIK (UJ)

MS E DU TOIT (NUST) MS M COETZER (UJ)
MR K TRIEGAARDT (BDO)

MODERATORS: PROF A MOHAMMADALI-HAJI (UJ)

MS W TERBLANCHE (UFH)

READING TIME: 37 MINUTES

WRITING TIME: 188 MINUTES

MARKS: 125

 THE REQUIRED CONSISTS OF 4 PAGES AND 3 QUESTIONS.

(front page included).
 SILENT NON-PROGRAMMABLE CALCULATORS ARE ALLOWED.
 SHOW ALL CALCULATIONS.
 START EVERY PART TO A QUESTION AT THE TOP OF A PAGE.
 IF PENCIL OR TIPPEX OR ERASABLE PENS WERE USED ON THE ANSWER SHEET, IT DOES NOT
QUALIFY FOR REMARKING.
 SCRATCH OUT OPEN SPACES AND EMPTY PAGES.
 THIS IS AN OPEN BOOK ASSESSMENT – ALL FIVE VOLUMES OF ‘A Guide Through IFRS’ MAY BE
USED DURING THE ASSESSMENT AS WELL AS OFFICIAL COPIES OF STANDARDS AND
ILLUSTRATIVE EXAMPLES ISSUED BY THE IASB. BOOKS AND OTHER INFORMATION MAY ONLY
BE FLAGGED, HIGHLIGHTED AND UNDERLINED; NO WRITING MAY BE ON THE PAGES. NO
OTHER MATERIAL IS PERMITTED.
COURSE: ACCOUNTANCY 300 / S3BCTQ2
SASS6-Q1-2019
2

QUESTION 1 (40 MARKS)

a) Disclose the appropriate note required in terms of IAS 8 Accounting Policies, (14)
Changes in Accounting Estimates and Errors as it relates to the bottling plant and
related dismantling provision for Phuza Limited for the financial year ended
28 February 2018.

Note
 Show all calculations as marks will be awarded for the calculations.
 All amounts to be rounded to the nearest Rand.

Communication skills: clear calculations; logical flow (1)

b) Calculate the total tax expense that Phuza Limited would present in its statement (25)
of profit or loss for the financial year ended 28 February 2018.

Note
 Comparatives are not required.
 Show all calculations as marks will be awarded for the calculations.
 All amounts to be rounded to the nearest Rand.

TOTAL FOR QUESTION 1 [40]

Question adapted from University of Limpopo

COURSE: ACCOUNTANCY 300 / S3BCTQ2
SASS6-Q2-2019
3

QUESTION 2 (45 MARKS)

a) Prepare the pro-forma journal entries required to record the All-Things-Dairy (7)
Limited intra-group transactions with Solargen Power (Pty) Limited in the
consolidated financial statements for the year ended 31 December 2019.

Note
 Journal narrations are required.
 Show all calculations as marks will be awarded for the calculations.
 All amounts to be rounded to the nearest Rand.

Communication skills: journal narrations, clear calculations (1)

b) Prepare an extract of the consolidated statement of financial position of the (19)

All-Things-Dairy Limited group as at 31 December 2019.

ONLY the following line items are required:

1) Investment in Solargen Power Limited, and
2) Goodwill.

Note
 Comparatives are not required.
 Show all calculations as marks will be awarded for the calculations.
 All amounts to be rounded to the nearest Rand.

Communication skills: Presentation – IAS 1 elements (1)

c) Prepare ONLY the retained earnings column that will be disclosed in the (16)
consolidated statement of changes in equity of the All-Things-Dairy Limited group
for the financial year ended 31 December 2019.

Note
 Comparatives are not required.
 Show all calculations as marks will be awarded for the calculations.
 All amounts to be rounded to the nearest Rand.

Communication skills: Presentation – IAS 1 elements (1)

TOTAL FOR QUESTION 2 [45]

COURSE: ACCOUNTANCY 300 / S3BCTQ2
SASS6-Q3-2019
4

QUESTION 3 (40 MARKS)

This question is a continuation of the All-Things-Dairy (Pty) Limited scenario; for the purposes
of this question you may assume that all matters noted in question 2 have been correctly
accounted for in the information provided below, i.e. you do not need to update this question
for the matters noted in question 2.

a) Prepare all the journal entries required to record all transactions relating to the (14)
Check n Pay supply agreement as well as the forward exchange contracts
entered into for the year ended 31 December 2018.

Note
 Journal narrations and dates are required
 Show all calculations as marks will be awarded for the calculations

b) Calculate the total amounts that should be disclosed in the statement of profit (10)
or loss for the year ended 31 December 2019 in respect of the following
transactions only:
1) Forward exchange contract(s),
2) Pasteurisation machine, and
3) Debentures.

Note
 Show all calculations as marks will be awarded for the calculations

Communication skills: easy to follow calculations (1)

c) Discuss how the financial assets invested in by All-Things-Dairy (Pty) Limited (14)
should be classified and measured both at initial recognition, as well as for the
period ended 31 December 2019, with reference to the appropriate guidance
from IFRS 9 Financial Instruments as relevant. Support your discussion with
appropriate calculations.

As part of your discussion, you should also briefly discuss the financial risks
associated with the financial assets, as defined in IFRS 7 Financial
instruments: Disclosures.

Note
 Show all calculations as marks will be awarded for the calculations
Communication skills: clarity of expression (1)

TOTAL FOR QUESTION 3 [40]