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ASSIGNMENT LETTER
Programme(s)
BBA, BAcc., Dip. Acc., BEd., Advance Dip in Edu.
2017 SEMESTER (2)
[FINANCIAL ACCOUNTING 1B]
[AFE3692]
DUE DATES
Assignment 1
28 July 2017 Only Semester 2 modulesAssignment 2
01 September 2017 Only Semester 2 modulesAssignments
Resubmissions
29 September 2017 All assignments of Semester 2
modules
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2017 Assignments
[FINANCIAL ACCOUNTING 1B – AFE3692]
Dear Student,
Welcome to the University of Namibia and to the Centre for Open, Distance and e-Learning (CODeL) in particular. We hope your studies will be rewarded with success. We kindly advise that you get all the relevant information and booklets available for distance students from your nearest UNAM centre (including the 2017 CODeL Letter to Distance Mode Students and the Online Assignment Submission Guide on Moodle). These documents will provide advice on how to approach your studies and will guide you through your study materials as well as providing useful administrative information in submitting assignments.
Study materials
Your study guide is essentially your “teacher/lecturer”. However, in addition you are required to visit the library to
consult prescribed books and recommended readings that are indicated in the study guide. You are also responsible to purchase any prescribed textbooks required for your respective courses/modules. Furthermore, you are strongly advised to follow the guidelines in the Online Assignment Submission Guide on Moodle.
Submission of assignments
It is very important to complete and submit a clean, clear and well-argued assignment for marking. Make sure that you have answered the questions correctly. It is the responsibility of you as a student to make sure that every page of the completed assignment is correctly numbered before submitting your assignment. From 2017, ALL assignments would be submitted through the Moodle Learning Management System. This is an online platform where you will access all your modules and related information such as course outline, course notes and other learning materials that your tutor may choose to share, as well as communicate with your tutors and with fellow students through forum discussions or other available communication tools. Moodle is accessible here: http://elearning.unam.edu.na (please refer to the 2017 CODeL Letter to Distance Mode Students). You should complete and submit all assignments on or before the given due date in the assignment letter if you wish to be admitted to the next examination. No hardcopies are allowed, all assignment are to be uploaded through Moodle.
Assignments should be submitted in PDF and Microsoft Word formats – only.
Make sure that you submit one assignment as one file/document. Do not create and upload several folders; do not zip the documents. Have 1 one document/file for 1 (ONE) entire assignment.
Assignments for modules with formulas can be handwritten, scanned in one document and uploaded on Moodle accordingly.
Make sure you submit a document that is readable and virus free.
Make sure you upload the right file with the relevant assignment content.
After submitting your assignment on Moodle do verify on the file you uploaded. Always try to submit your assignment few days before the due date, this will allow you to double-check all the needy-greedy.
NO LATE SUBMISSIONS WILL BE TOLERATED. NO LATE submission due to not adhering to the above advises or guidance WILL BE ACCEPTED.
Due Dates
All assignment due dates for 2017 are published on the cover of this letter. With the shift from manual to online assignment submission, due dates would be automated. This means that you would be required to submit your assignments on the due date set on your assignment before 11h59 PM. After the date has passed (i.e. 12h00AM the next day) the assignment submission will be disabled and you would no longer be able to submit your assignment.
Due to challenges with Internet connectivity and speed, large files may take too long to upload, which is a big risk if you submit a few minutes to the deadline. You are therefore strongly advised not to wait until the last minute to submit your assignments so that you can report potential challenges and avoid disappointments. If you were used to submitting late assignments through the portal, you are cordially cautioned that this would no longer be possible with automated due dates on Moodle.
Page 3 of 16 Plagiarism Control
It has been observed that some students copy information from the Internet and paste into their assignments without acknowledging the sources of the information. This is called plagiarism. A copy of the Policy on Plagiarism and Cheating has been provided to you through the UNAM website. Please note that plagiarism and copying and pasting would not be tolerated and shall result in your assignments declared null and void. All assignments submitted through Moodle would be checked for plagiarism using plagiarism detection software. You will receive a report on the overall overlapping of your assignment with the sources you have used. You are therefore strongly urged to acknowledge EVERY source that you use for your assignment by using the appropriate referencing style prescribed by your lecturers (APA Referencing guides are available freely online). Find one here: http://www.uofa.edu/docs/apa-documentation.pdf
Any assignment found with high overlapping scores or with evidence of clear attempts to cheat such as submitting an assignment that is not your own would result in serious consequences (please refer to the Policy on Plagiarism and Cheating provided).
LATE SUBMISSION OF ASSIGNMENTS or WRITING OF TESTS
Late assignment will not be accepted nor marked. If there is a reason why you cannot meet the due date, please consider cancelling the module within the cancellation deadlines or contact Student Support Coordinator for advice.
Vacation schools
Attending vacation school is COMPULSORY and the vacation school timetable will be made available at your nearest UNAM centre and through the UNAM portal.
My UNAM Portal /Moodle
We recommend that you regularly (at least thrice a week) access My UNAM Portal (for administrative and academic information) and Moodle (for learning and assessment information) on the UNAM website for further information at the following URLs: http://my.unam.edu.na and http://elearning.unam.edu.na
Closing remarks
If you study conscientiously, your efforts will be rewarded. Should you need any assistance or clarification on the module contents, you can reach the relevant staff members at the contact details as given below:
Tutor:
For Subject content related matters only
Hilja Haufiku 061-2064803 hhaufiku@unam.na
Student Support
Lizzy Xoagus 061-2063608
lxoagus@unam.na
– not ixoagus but l (L) for Lizzy
Examination Officer:
Examination Matters
Moyyo Jussy 061-2063715 jmoyyo@unam.na
eLearning Coordinator:
Kooper G. 061-2063249 gkooper@unam.naPage 4 of 16
STUDENTS – KINDLY NOTE: REFER TO RULES AND REGULATIONS in this letter BEFORE UPLOADING YOUR ASSIGNMENT ON MOODLE. Resubmission is applicable to students who submitted their assignments and score a mark of 0-39%. When you obtained 40% and above in your assignment, you don’t qualify to resubmit your assignment.
afeAssignment 01
QUESTION 1 (15 Marks: 27 Minutes)
1.1 The aim of financial statements is to provide information about the: A. Business finances
B. Financial position, performance and cash flow information of the business C. Economic resources of the business
1.2 The financial position of a company is shown in the: A. Statement of financial position
B. Statement of changes in equity C. Statement of profit or loss
1.3 The financial performance of a company is shown in the: A. Statement of financial position
B. Statement of changes in equity C. Statement of profit or loss
1.4 Financial statements are based on two underlying assumptions, namely: A. The accrual basis and the going concern assumption
B. The cost and benefit basis
C. The financial statement and analysis basis
1.5 Information is material if:
A. Its omission or misstatement could influence the economic decisions of management.
B. Its omission or misstatement could influence the economic decisions of users of the financial statements.
C. Its omission or misstatement does not influence the economic decisions of the users of the financial statements.
1.6 An asset can be defined as:
A. A resource, managed by the entity, as a result of a past event, the purchase of which is expected to result in future benefits flowing into the entity.
B. A resource, managed by the entity, as a result of a future event, the purchase of which is expected to result in future benefits flowing into the entity.
C. A resource, controlled by the entity, as a result of a past event, the purchase of which is expected to result in future benefits flowing into the entity.
1.7 A liability is considered to be a: A. Past obligation
B. Present obligation C. Future obligation
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B. Statement of financial position
C. Statement of profit or loss & other comprehensive income 1.9 Expenses result in the statement of profit or loss profit:
A. Increasing B. Decreasing
C. Remaining the same
1.10 Measuring elements of the financial statements can be done using: A. Historical cost, current cost, realisable value and present value B. A calculator
C. Historical cost, current cost, realisable cost and cost-benefit analysis.
2. Match Column A to Column B:
Column A Column B
2.1 The framework A
Relevance, materiality and faithful representation
2.2
Qualitative characteristic of
financial statements B
It is necessary to find the trade-off between various qualitative characteristics.
2.3 Faithful representation C Assets, equity and liabilities
2.4
Balance between qualitative
characteristics D
To be reliable, information must faithfully represent the transactions.
2.5 Element of the financial statements E
States that financial statements should be based on two underlying
assumptions.
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A recent graduate, Bob, struggled to find work as an accountant. While at home one day, he noticed large trucks with full-grown trees driving past. They were going to a new housing 9development in his street, where landscapers were developing the gardens and planting mature trees as instant landscape features.
Because Bob had grown up in a farming area and worked on farms in his vacations, he had some knowledge about growing trees and decided that he would do some research and find a gap in the market for something similar.
He and his friend Neo, who had some inherited money, started a small business selling full-grown palm trees. The palm trees were in high demand from municipalities all over South Africa.
While visiting his university lecturer. Bob asked her advice as to what would be the best way to register the business so that it would benefit both himself and Neo. (Bob had no start-up capital of his own and the two friend would have to borrow more money to get the business going). As he left the university area, he noticed a vacant piece of land that had previously been used as a fruit farm. It looked fertile and suitable for growing young palm trees and also storing sourced (purchased) older palm trees.
Once Neo had agreed and become involved in this business idea, the two friends decided to [put in an offer to purchase the property on 1 July after the registration of their business. A purchase price of R900 000 was paid on 31 July 20x0
The property was then registered in the deeds office on 15 August 20x0 in the name of Breezy Palms Enterprises. The property was now theirs to do with as they pleased.
The purchased price was paid from Noes capital of R30 000 and Loan (from One Love Bank). This agreement was entered into on 31 July 20x0 at an interest rate of 10% payable monthly with the capital portion of the loan being payable in monthly instalments over a period of 10 years.
On 1 September, they brought in another company, Trees Planters CC, who would supply and plant the trees that would generate a revenue over many years. Trees Planters charged them R10 000 for every hectare of trees planted.
Bob and Neo then agreed to an additional maintenance contract with Trees Planters CC, stipulating that they would maintain and prune the young trees to ensure that they grew upright over the next 10 years , for an annual fee of R15 000.
During the current year, Breezy Palms Enterprise incurred R150 000 on the purchase and planting of the trees was well as R15 000 on the pruning and maintenance of the trees.
Bob and Neo took care of the sourcing of mature trees themselves, which cost them R3 000 a month in adverting, labour and transport.
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The accountants showed every cost incurred as an expense in the current year. The financial director feels that a part of the transactions above may be stated as an asset.
You are required to:
Provide a well- reasoned argument with reference to the accounting frameworks as to whether the treatment of the above transactions was appropriate. Your answer should distinguish between these transactions
1. The purchase of land 2. Loan from One Love Bank 3. Interest on Loan
4. Planting, pruning and maintenance of young trees.
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Onkoshi Ltd is a public company listed on the Namibian Stock Exchange (NSX). The company applies International Financial Reporting Standards (IFRS) to prepare its financial statements and has elected to present its statement of profit or loss and other comprehensive income according to the function of expenses method.
The company’s financial accountant prepared the following statement of profit or loss and other
comprehensive income for the year ended 31 December 2016:
Statement of profit or loss and other comprehensive income for the year 2016
Revenue 12 000 000
Cost of sales (5 000 000)
Gross profit 8 000 000
Depreciation (15 000 000)
Salaries and wages (6 500 000)
Telephone expenses (75 000)
Dividend declared (125 000)
Surplus on revaluation of property, plant and equipment 225 000
Other expenses (8 000 000)
Purchase of property, plant and equipment (4 250 000)
Issue of ordinary shares at par 1 000 000
Profit for the year (12 150 000)
Required:
2.1 Briefly explain to the financial accountant why dividends declared of N$ 125 000 should not be presented in the statement of profit or loss and other comprehensive income as an expense. Your answer should refer to the relevant definition in the conceptual framework.
2.2 Provide a critical analysis of the above-mentioned statement of profit or loss and other comprehensive income in terms of IAS 1 and the conceptual framework.
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You are the recently appointed accountant of Okaukuejo Ltd. The following list of balances as at 31 December 2015 and additional information is presented to you:
Account details Amount in (N$)
Issued share capital:
Ordinary share capital ( 1 500 000 shares of N$ 1 each)
12% Declared Preference share capital (200 000 shares of N$ 2.5 each) Retained earnings (01/01/2015)
General reserve Share premium
2% Etosha Mortgage bond Trade and other payables Land and buildings at cost Delivery vehicles at cost
Provision for credit losses (01/02/2015)
1 500 000
The company’s authorized share capital consists of:
2 000 000 ordinary shares of N$ 1 each
500 000 12% preference shares of no par value
The following additional information should be taken into consideration:
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3. Part of the administration building was rented out from 01 August 2015 for N$ 15 000 per month.
4. On 01 July 2015, a delivery van that was purchased on 31 July 2013 for N$ 35 000 and with an accumulated depreciation of N$ 12 000 on 01 January 2015, was sold for N$ 16 500 cash.
5. Depreciation is provided for as follows:
No depreciation is provided for on land and buildings
Office furniture- 15% per annum on cost
Delivery vehicles- 20% per annum on diminishing balance method (used for the distribution of sales only)*
Computer equipment- 25% on cost
6. Water and electricity for the month of December amounted to N$ 1 026. This account was only received on 05 January 2016 and is not recognized yet.
7. The loan was received on 01 January 2014 and is secured by land and buildings, the interest rate is 2% per year on the outstanding balance and the loan is repayable in annual instalments of N$ 87 500 over 20 years every 31 October. Provision should be created for interest on loan for 31 December 2015.
8. The telephone expense of N$ 702 is still outstanding and must be paid.
9. The allowance for credit losses must be adjusted to 5% of outstanding debtors. 10. The company purchased land and buildings (Erf 151, Klein Windhoek) on 01 January
2014 for N$ 1 750 000 by taking out a loan from Etosha bank. The company’s accounting policy states that land and buildings should be revalued. Mr Namutoni, a sworn appraiser, revalued the land and buildings on 31 December at a fair value of N$ 2 100 000. No entries pertaining to the revaluation have been recorded.
11. The shareholders approved a final dividend of 25c per share on 31 December 2015. 12. Assume a tax rate of 28%.
REQUIRED:
Prepare the following financial statements for Okaukuejo Ltd:
1. Statement of profit or loss and other comprehensive income for the year ended 31 December 2015 according to the function of expenses method to comply with the requirements of IFRS and Companies Act 71 of 2008.
2. Statement of changes in equity for the year ended 31 December 2015 to comply with the requirements of IFRS and Companies Act 71 of 2008 .
3. Extracted statement of financial position as at 31 December 2015 to comply with the requirements of IFRS and Companies Act 71 of 2008 with the following notes: 3.1 Basis of presentation
3.2 Statement of significant accounting policies 3.3 Property, plant and equipment
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Assignment 02
QUESTION 1 (26 Marks: 47 Minutes)
Company A buys and sells brand jeans from a small factory shop in Keetmanshoop. The company started trading on 01 January 2017.
The following transactions took place in January:
1. Obtained a loan of N$ 50 000 from Namibia Financing Bank to fund the initial operations. 2. Purchased a delivery van for N$ 20 000, paid with cash from the bank loan.
3. Purchased 200 pairs of jeans from various suppliers on credit for N$ 150 per pair. 4. Sold 200 pairs of jeans for N$ 500 per pair. Half of these jeans were sold for cash, the
other half were sold on credit.
5. Paid employees salaries of N$ 4 000 by cheque.
6. Paid the monthly factory-shop rent of N$ 5 000 in cash to the landlord.
7. Interest of N$ 500 accrued on the outstanding loan balance. This interest is payable on the first day of the next month.
8. Depreciation on the delivery vehicle amounted to N$ 600 for the month.
9. Sent a cheque to suppliers in payment of 150 of the 200 pairs of jeans purchased during the month.
10. Received cash payments for 60 pairs of jeans purchased by debtors during the month. The remainder are expected to pay in February.
REQUIRED:
1. (a) Prepare the statement of profit or loss and other comprehensive income for the month of January. (4 Marks)
(b) Calculate Company A’s net cash received in January in respect of operating
activities. (3 Marks)
(c ) Calculate the differences between net cash received in respect of operating activities and net profit. (3 Marks)
(d) Provide reasons for the difference between net cash received in respect of operating activities and net profit. (4 Marks)
2. Prepare the bank account in the general ledger of Company A for the month of January. (6 Marks)
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QUESTION 2 (30 Marks: 54 Minutes)
The following abridged information is available:
Waterberg LTD 2012 2011
Statement of financial position as at as at 31
December 2012 N$
Statement of profit or loss and other comprehensive
income for the year ended 31 December 2012 N$
Revenue 550 000
Cost of sales (300 000)
Gross profit 250 000
Other expenses (99 000)
Share of profit of associates 54 500
Dividends received 14 000
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Profit before tax 205 500
Income tax expense (57 450)
Profit for the year 148 050
Waterberg LTD
Statement of changes in equity for the year ended 31 December 2012
Share capital Share premium
Revaluation surplus
Retained earnings
Total equity
N$
Balance at 31 December 2011 10 000 3 000 46 500 180 000 239 500
Profit for the period - - - 148 050 148 050
Dividends - - - (20 550) (20 550)
Issue of share capital 10 000 6 000 - — 16 000
Balance at 31 December 2012 20 000 9 000 46 500 307 500 383 000
Additional information
1. Profit before tax is stated after taking the following into account:
N$
Finance costs 18 000
Depreciation on machinery and equipment 58 000
Profit on sale of machinery and equipment 1 500
2. During the year, machinery and equipment was purchased for N$12 500 to replace machinery and equipment with a carrying amount of N$2 500, which was sold. 3. Property, plant in equipment consisted of the following:
2012 2011
N$ N$
Land at cost 295 500 296 500
Machinery and equipment at carrying amount 156 700 108 700
REQUIRED
Prepare the cash flow statement, using the direct method, of Waterberg Ltd for the year ended 31 December 2012 in accordance with International Financial Reporting Standards and
Schedule 4 of the Companies Act, 1973 (as amended) with the following notes:
1. Basis of presentation
2. Statement of significant accounting policies summary 3. Cash and cash equivalent
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QUESTION 3 (10 Marks: 18 Minutes)
The following information relates to Pretty Sam at 30 June:
20.2 N$
20.1 N$
Land and buildings at cost price 160 000 149 000
Vehicles at cost price 20 000 9 000
Accumulated depreciation: Vehicles 11 000 7 000
Capital 160 000 157 000
Investment 11 000 10 000
Cash and bank 2 000 -
Account receivable 14 000 18 000
Inventory 15 000 14 000
Long-term loan 24 000 20 000
Bank overdraft - 2 000
Profit of the year 11 610 -
Accrued interest on loan 2 000 -
Additional information
1 Interest received on the investment amounted to N$ 1 000.
2 Interest at 10% per annum is payable on the opening balance of the long-term loan. 3 Taxation paid amounted to N$ 2 610
REQUIRED
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QUESTION 4 (36 Marks: 65 Minutes)
The following are extracts from the statements of profit or loss and other comprehensive income and the statements of financial position of Turbo Ltd in respect of the financial years 2013 and 2014:
EXTRACT FROM STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME
N$ N$
2014 2013
Sales 1 032 000 784 000
Cost of goods sold 682 800 470 000
Interest expense 16 000 20 000
Profit before tax (after interest) 234 000 154 400
Profit after tax 163 800 108 000
EXTRACT FROM STATEMENT OF FINANCIAL POSITION
N$ N$
2014 2013
Ordinary share capital 400 000 120 000
12% Preference share capital 250 000 250 000
Retained earnings- 340 000 220 000
Long term debt (10% p.a.) 160 000 200 000
Trade payable 171 800 96 000
Inventory 160 000 200 000
Trade receivable 155 040 133 760
Cash and cash equivalents 35 200 30 400 Non-current assets at carrying value 905 400 636 000
ADDITIONAL INFORMATION: 1. 70% of sales are on credit 2. All purchases are on credit.
3. Authorised ordinary shares- 1 000 000 shares of N$ 2 each 4. Authorised preference shares- 500 000 of N$ 3 each
5. The market price of the ordinary shares at the end of the financial year of 2014 is N$ 7.50
YOU ARE REQUIRED TO:
1. Calculate the following ratios in respect of the year 2013 and 2014 and critically evaluate the movements:
1.1 Profit margin (2)
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1.4 Return on assets (2) 1.5 Financial leverage (2) 1.6 Current ratio (2)
1.7 Inventory holding period (2) (Inventory for 2012- N$ 180 000)
1.8 Trade payables payment period (2) (Trade payables for 2012- N$ 105 000) 1.9 Trade receivables collection period (2) (Trade debtors for 2012- N$ 147 500)
1.10 Debt equity ratio (2) 1.11 Debt ratio (2)
1.12 Times interest earned ratio (2) 1.13 Earnings per share (2)
1.14 Price earnings ratio (2)
2. What is the length of the working capital cycle of Turbo Ltd for X4? (1)
3. The Second National Bank of Namibia is attempting to evaluate Turbo Ltd, a loan applicant, for a short-term loan. Consider the information provided and your calculations in (1) above and prepare a report to The Second National Bank loan officer, Mrs Lorna Simms, outlining those factors which might be useful to her in making her decision before granting the loan to Turbo Ltd. (3)
