FAC3701/Assignment01/2/2022

General Financial Reporting

FAC3701

Semester 2
Assignment 01

Department of Financial Accounting

Open Rubric
 CONTENTS

Page
1 INTRODUCTION .......................................................................................................................... 3
2 LECTURER(S) AND CONTACT DETAILS.................................................................................... 4
2.1 Lecturers....................................................................................................................................... 4
2.2 College Information Coordinator ................................................................................................... 4
3 COMPULSORY ASSIGNMENT 01 (WRITTEN) - SECOND SEMESTER ..................................... 5

2
 FAC3701

1 INTRODUCTION
Dear Student

Your year-mark, consisting of assignment 01 and assignment 02, counts 20% and the
examination 80% toward your final mark. You need to obtain a mark of 40% in the examination
for your year mark of to count. If you obtain less than 40% in the examination your year-mark
will not be taken into account.
You need to submit at least one assignment to obtain exam admission.
The due dates for the assignments are as follows:
Contribution
towards
year-mark Type Due date
Assignment 01 15% Written
Assignment 02 5% MCQ

Please note:
You need to visit the website for FAC3701 on myUnisa frequently especially
for announcements. The website for your module is:
FAC3701-22-S2 for second semester students.
To gain access to the module site, go to the following website:
https://my.unisa.ac.za and login with your student number and password. You
will see FAC3701 in the row of modules in the orange blocks at the top of the
webpage. You can also check in the ‘more-tab’ if you cannot find it in the
orange blocks. Click on the module you want to open.

Download following study material for this module online on myUnisa

Study material Content

Tutorial letter 501 Learning Units
Tutorial letter 101 Important information
Tutorial letter 102 Integrated questions with suggested solutions
Tutorial letter 103 Additional questions with solutions and e-tutor activities
Tutorial letter 201 Suggested solution to compulsory assignment 01
Tutorial letter 202 Suggested solution to compulsory assignment 02

PLEASE NOTE: If any additional tutorial letters, except the above-mentioned, are posted to
you, an announcement to inform you thereof will be made via myUnisa.

3
2 LECTURER(S) AND CONTACT DETAILS
2.1 Lecturers
You may contact your lecturers by e-mail, telephone or on myUnisa.

Lecturer Tel No
Mr Y Mohamed (012) 4294414
Mr J Riekert (012) 4292135
Mrs L Labuschagne (012) 4294694

E-mail

FAC3701@unisa.ac.za

2.2 College Information Coordinator

Mr. Jabulani Chauke: (012) 429 2982/2233
E-mail: CASenquiries@unisa.ac.za

Ensure that your student number, return address and telephone numbers are included
with your enquiries. Always have your student number at hand when contacting the
university.

4
 FAC3701

3 COMPULSORY ASSIGNMENT 01 (WRITTEN) - SECOND SEMESTER

ASSIGNMENT 01 WILL CONTRIBUTE 15% TOWARDS YOUR FINAL

MARK.

SEMESTER 2
UNIQUE NUMBER: 689640

DUE DATE: 24 August 2022

PLEASE NOTE:
1. This assignment consists of only one (1) question with subsections.

2. All subsections of this question must be answered.

3. All calculations must be shown.

4. Please follow the instructions in the required part of the question carefully to ensure that you
obtain the maximum marks for the subsection of the question.

5. This assignment covers learning unit 1 of tutorial letter 501. Work carefully through the
relevant tutorial matter before you attempt the assignment. Please note that only certain
subsections of this question will be marked.

6. No extension will be granted for the late submission of this assignment and no
correspondence or telephone conversations will be conducted in this regard.

7. Please follow the instructions for the submission of the written assignment carefully.

INSTRUCTIONS FOR SUBMISSION OF WRITTEN ASSIGNMENTS

Written assignments should be submitted electronically via myUnisa.

PLEASE NOTE:
• If you electronically submit the written assignment via myUnisa the file must be
converted to or scanned in PDF-format.
• The assignment must be scanned and submitted as only one PDF file. The PDF file
must not be a “read only” file.
• Any format other than PDF will not be accepted by myUnisa
• Written assignments can ONLY be submitted ONCE on myUnisa. No corrections to your
assignment can be done after submission.

5
ASSIGNMENT 01 (Second semester) (30 marks)

WRITTEN ASSIGNMENT
Van Riebeeck Ltd is a well-diversified company specializing in arts and antiques which is listed
on the Johannesburg Stock Exchange. Van Riebeeck Ltd retails in arts and antiques,
manufactures antique replicas and publishes an “arts and antiques” magazine.
The profit before tax of Van Riebeeck Ltd for the year ended 28 February 2022 amounted to
R1 967 500, including the following items:
R
Income
Dividends received – South African listed companies 500 000
Foreign income – United Kingdom (refer 4) 300 000
Advertising and subscription fees received (refer 3) 470 000
Profit on sale of Machine A (refer 1) 887 500
Expenses
Depreciation (refer 1) 387 500
Credit losses (refer 2) 80 000

Additional information:
1. On 1 March 2020, Van Riebeeck Ltd purchased Machine A for R1 500 000 at an auction,
which was immediately available for use, as intended by management. On
31 December 2021 Van Riebeeck Ltd sold Machine A for R1 700 000. The tax base of
Machine A amounted to R1 200 000 on 28 February 2021 and R900 000 on
31 December 2021, which you can assume to be correct.
On 2 January 2022, Van Riebeeck Ltd replaced Machine A by purchasing Machine B, a
more technologically advanced machine, for R1 800 000 on credit.

The depreciation expense for both Machine A that was sold as well as the newly acquired
Machine B have already been correctly recorded according to the depreciation policy
adopted by Van Riebeeck Ltd, in the accounting records of Van Riebeeck Ltd for the year
ended 28 February 2022. The depreciation expense relating to machinery for the respective
years is as follows:
28 February 28 February
2022 2021
R R
Machine A 312 500 375 000
Machine B 75 000 −
387 500 375 000

The SA Revenue Service allows a capital allowance on machinery over five (5) years, not
pro-rata, according to the straight-line method in terms of section 12C of the Income Tax Act.
2. The SA Revenue Service allows 25% of the allowance for credit losses as a tax deduction.
In the previous financial year Van Riebeeck Ltd made no allowance for credit losses
because the company had no credit sales.

6
 FAC3701

ASSIGNMENT 01 (Second semester)(continued)

3. Advertising income and subscription fees received in cash from the “Arts and Antiques”
magazine published by Van Riebeeck Ltd were as follows for the respective years:
28 February 2022 28 February 2021
R R
Subscription fees received on a monthly basis 400 000 800 000
Subscription fees received in advance from 30 000 -
subscribers during February 2022 for the March
2022 edition
Advertising fees received during February 2021 - 70 000
for advertisements that will only be published in
the March 2021 edition
430 000 870 000

4. On 1 March 2021 the balance on the “SA Revenue Service – current tax” general ledger
account of Van Riebeeck Ltd had a credit balance of R70 000, relating only to the current tax
due for the financial year ended 28 February 2021.
The newly appointed trainee accountant indicated to you that the following transactions
relating to income tax have not been recorded yet in the accounting records of Van Riebeeck
Ltd for the financial year ended 28 February 2022:
R
• Foreign tax paid 20 000
This foreign tax was paid on 31 March 2021 in respect of foreign income
received from the United Kingdom of R300 000, which is not taxable in
South Africa
• First provisional tax payment made on 25 September 2021 110 000
• Interest paid on first provisional tax paid on 25 September 2021 1 500
• Final payment in respect of current tax due according to the 2021 tax 60 000
assessment made on 31 October 2021.
The financial accountant of Van Riebeeck Ltd was in agreement with this
2020 tax assessment as he omitted to claim expenses which are allowed
by SARS
• Second provisional tax payment made on 28 February 2022 80 000

5. On 10 February 2022, dividends amounting to R130 000 for the year ended
28 February 2022, were declared and approved by the board of directors. All the
shareholders of Van Riebeeck Ltd are natural persons. The dividends and dividends tax
were paid on 10 March 2022. This transaction has already been correctly recorded in the
accounting records of Van Riebeeck Ltd for the year ended 28 February 2022.
The SA Normal tax rate changed from 29% in previous years to 28% in 2022. The capital gains
tax inclusion rate is 80%. The dividend tax rate is 20%. The company provides for deferred tax
on all temporary differences using the statement of financial position approach. The company
will have sufficient taxable profit in future against which any unused tax losses can be utilized.
There are no other exempt or temporary differences except those mentioned in the question.
Assume all amounts to be material.
Ignore the implications of Value-added tax (VAT).

7
ASSIGNMENT 01 (Second semester)(continued)
REQUIRED:

Marks
a) Prepare all the general journal entries to correctly record the relevant 7
transactions in additional information (4) in the accounting records of Van
Riebeeck Ltd for the year ended 28 February 2022.
Journal narrations are not required.
No abbreviations for general ledger account names in your journals may be
used.

Indicate in your journal if it is a statement of financial position (SFP) or

statement of profit or loss and other comprehensive income (P/L) general
ledger account.
b) Calculate the deferred tax balances in the statement of financial position of Van
8½
Riebeeck Ltd for both the years ended 28 February 2021 and
28 February 2022, using the statement of financial position approach,
according to the requirements of IAS 12, Income taxes. Indicate if the balance
is a deferred tax asset or deferred tax liability.
c) Calculate the current tax expense in the statement of profit or loss and other
comprehensive income of Van Riebeeck Ltd for the year ended
28 February 2022, according to the requirements of IAS 12, Income taxes. 6
The movement in temporary differences in the current tax calculation
should be calculated using the statement of financial position approach.

d) Disclose the income tax expense note, excluding the tax rate reconciliation, in 5
the notes to the annual financial statements of Van Riebeeck Ltd for the year
ended 28 February 2022, according to the requirements of IAS 12, Income
taxes.
No accounting policy notes are required.
Comparative amounts are not required.
e) Disclose all relevant items relating to the dividends declared in additional
information (5) in the statement of financial position of Van Riebeeck Ltd as at 3½
28 February 2022.
[30]
Please note:
Your answer must comply with the requirements of International Financial
Reporting Standards (IFRS).

All calculations must be shown.

Calculations are to be done to the nearest Rand.

Ref:/FAC3701_2022_TL_Assignment01_B.pdf
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