Question 1

You are recently appointed as accountant of Namibia Luxury Traders. The following list of balances and
additional information is presented to you:

List of balances as at 28 February 2012 N$

Capital 105 000
Drawings 15 000
Furniture 50 000
Delivery vehicles 140 000
Accumulated depreciation: Furniture 10 000
Accumulated depreciation: Delivery vehicles 65 000
15% Bank Loan 80 000
Receivables 105 000
Payables 27 000
Inventories 25 000
Bank overdraft 52 400
Petty cash 250
Sales 321 000
Purchases 228 000
Returns inwards 8 000
Return outwards 4 000
Freight on purchases 1 000
Freight on sales 2 000
Advertising expenses 15 000
Bank charges 650
Salaries 34 000
Interest on loan 5 400
Rent expense 24 800
Stationery 2 300
Water and electricity 8 000

Additional information:

1. The inventories amounted to N$ 55 000 on 28 February 2012. Inventories are measured at the lower
of cost, on the FIFO method, and net realisable value.

2. On 01 July 2011 a delivery vehicle with a purchase price of N$ 30 000 and with a carrying amount
of N$ 18 000 on 28 February 2011 was traded in on a new vehicle with a purchase price of
N$ 54 000. The previous accountant made only the following entry:

Dr Delivery vehicles 42 750

Cr bank 42 750
3. Depreciation is written off as follows:
Furniture 15% per annum on cost

Delivery vehicles 20% per annum on the diminishing balance

 4. The rent contract was concluded on 01 August 2011 at a monthly rent of N$ 3 100.
5. On 28 February 2012 stationery on hand amounted to N$ 400
6. Water and electricity for February 2012 amounted to N$ 900. The account was only received on 05
March 2012 and is not recognised yet.
7. The loan was received on 01 September 2011, the interest rate is 15% per year and the loan is
repayable in equal annual instalments of N$ 20 000 (payment period of 4 (four) years) from 31
August 2012.

Required:

1) Prepare the financial statements for Namibia Luxury Traders for the year ended 28 February 2012.
The presentation and disclosure of the financial statements must comply with the requirements of
Companies Act 71 of 2008 International Financial Reporting Standards (IFRS).
Comparative figures are required.
2) Prepare the notes for:
2.1 Property, Plant and Equipment
2.2 Inventory

Question 2
Neath Limited provides the following information in respect of the company’s non-current assets:
1. On 1 January 2012 the carrying amount of machinery was N$ 76 800.
2. On 31 March 2012 the above machinery was traded in for a more modern machinery costing
N$ 200 000.
3. N$ 75 000 was received for the old machinery and the balance of the purchase price was settled in
cash.
4. The machinery traded in was originally purchased on 1 January 2009.
5. Depreciation is written off using the diminishing balance method at 20% per annum.
6. On 1 January 2012 the value of land and building was N$ 1 002 000. No deprecation is provided for
land, building is depreciated at 2% per annum using straight-line method.
7. Land was purchased on 1 March 2008 at a cost of N$ 450 000 and the accumulated depreciation for
buildings was N$ 48 000 as at 1 January 2012.
8. On 2 March 2012 new equipment worth N$ 150 000 was purchased. Depreciation on equipment
will be accounted for using straight-line method at 15% per annum.
9. The financial year end is 31 December each year.

Required: Marks
Prepare an extract of the statement of financial position for Neath Ltd as at 31 December 2012
and show how the non-current assets will be disclosed with necessary notes to comply with
minimum requirements of companies Act 71 of 2008 and International financial reporting
standards (IFRSs). Comparative figures are required.
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