2017 SEMESTER 2 FINANCIAL ACCOUNTING 2B
ASSIGNMENT LETTER
Programme(s)
BAcc, BEd, ADPT
2017
SEMESTER (2)
[FINANCIAL ACCOUNTING 2B]
[AFE3782]
DUE DATES
Assignment 1
Assignment 2
Assignments
Resubmissions
Vacation School
28 July 2017
01 September 2017
29 September 2017
29 August- 01 September 2017
Page 1 of 12
Only Semester 2 modules
Only Semester 2 modules
All assignments of Semester 2
modules
All CODeL Programmes
2017
Assignments
[Financial Accounting 2B – AFE3782]
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.
Timely submission of all assignments on or before the given due date is crucial for the timely calculation of your CA
mark and determining admission to exams. Take note that assignments should never be submitted directly to
individual tutors or any other staff members of the University of Namibia.
Page 2 of 12
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/apadocumentation.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:
Alfred Makosa
081 368 2936
makosaa@gmail.com
Charlene Kaereho
061-2063729
ckaereho@unam.na
Josua Lukas (Matati)
065-2232267
ljosua@unam.na
For Subject content related matters only
Student Support
Lecturers/Coordinators:
Distance Education Officer:
lxoagus@unam.na
Lizzy Xoagus
061-2063608
– not ixoagus but l (L) for
Lizzy
Moyyo Jussy
061-2063715
jmoyyo@unam.na
Kooper G.
061-2063249
gkooper@unam.na
Assignment marks
Examination Officer:
Examination Matters
eLearning Coordinator:
NOTE: For additional information consult the CODeL Prospectus and UNAM General Information and Regulations
Prospectus.
Page 3 of 12
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.
Assignment 1 (94 marks)
Question 1 – IAS 27 consolidated and separate financial statements
The following are statements of financial position for Arc and Curve as at 31 December 2016.
Assets
Non-current assets
Property, plant and equipment
Available for sale investments (see note 1)
Arc
Curve
N$000
N$000
16 000
4 000
12 000
4 000
4 000
-
Current assets
6 400
2 000
Inventories
Trade receivables
Cash and cash equivalents
2 200
3 400
800
800
900
300
Total assets
22 400
6 000
Equity and Liabilities
Equity
17 700
5 000
10 000
7 500
200
1 000
4 000
-
Non-current liabilities
2 700
-
Long terms borrowings
Current liabilities
Total liabilities
2 700
2 000
4 700
1 000
1 000
22 400
6 000
Ordinary share capital of N$1 each
Retained earnings
Other components of equity (reserves)
Total equity
Total equity and liabilities
Additional information:
Page 4 of 12
(30 marks)
1. Arc acquired its 75% interest in Curve on 1 May 2016 for a consideration of N$3 800 000. On the
date of acquisition Curve had retained earnings of N$3 200 000. Arc has classified its investment
in Curve as available for sale. The other components of equity for Arc includes the subsequent
gain on the investment as at 31 December 2016.
2. The group has elected to value non-controlling interest at fair value at the date of acquisition.
On 1 May 2016, the fair value of non-controlling interest was N$1 600 000.
3. On the date of acquisition, the fair value of the net assets acquired were deemed to be the same
as their carrying amounts except the following:
The carrying amount of property, plant and equipment was N$800 000 lower than its
fair value. These assets are estimated to have an economic useful life of 16 years from 1
May 2016. It is company policy to charge a full year depreciation in the year of
acquisition and none in the year of disposal.
The carrying amount of the inventory was also estimated to be N$200 000 lower than its
fair value. All the inventories were realised by 31 December 2016.
On the date of acquisition, Curve had internally developed an intangible asset that met
the recognition criteria of IAS 38 Intangible Assets. The intangible asset was valued at
N$150 000 and is expected to generate economic benefits from 1 May 2016 to 31
December 2017.
A contingent liability that had a fair value of N$84 000 on 31 December 2016, had a fair
value of N$210 000 on 1 May 2016.
4. Following an impairment review done on 31 December 2016, it was found that goodwill from
the acquisition of Curve was impaired by 20%.
5. Curve bought goods from Arc for N$300 000. Arc makes a gross profit margin of 20% on all sales.
On 31 December 2016., half of the goods bought by Curve from Arc were still unsold.
6. There were no dividends paid by each of the entities in the year ended 31 December 2016.
Requirement:
Prepare the consolidated statement of financial position for the Arc Group as at 31 December 2016
showing all the necessary workings.
(30 marks)
Question 2: IFRS 5 Non-current assets held for sale and discontinued operations
(35 marks)
Businesses are often faced with challenging decisions whether to discontinue a part of their overall
business or close an entity. IFRS 5 Non-Current Assets Held for Sale and Discontinued Operations
provides guidance on the accounting treatment in such situations.
Kitchen Décor Ltd, whose financial year end is 31 December every year, is a company that sells kitchen
fitting in the domestic market. The company has three (3) manufacturing plants based in Windhoek,
Rehoboth and Mariental. Due to change in customer tastes, there have been a deterioration in the
performance of the Rehoboth division in the last 12 months. At a Board meeting on 14 December 2016,
Page 5 of 12
the Directors of Kitchen Decor decided, reluctantly, to cease manufacturing at the Rehoboth division
and sell the factory. The staff, customers and suppliers were immediately informed and a press release
was put in the Namibian newspaper. The managing director has approached you as the financial
accountant and has directed you that the Rehoboth operations should be shown as a discontinued
operation in the financial statements for the year ending 31 December 2016. Due to the declining
business performance of the Rehoboth division on 1 October 2016, Kitchen Décor Ltd increased
production capacity at its Windhoek division. The following are the extracts from Kitchen Décor Ltd
Statement of profit or loss and other comprehensive income:
Revenue
Cost of sales
Gross profit/(loss)
Operating expenses
Profit/(loss) before tax
Windhoek
N$000
30 000
(23 500)
6 500
(1 800)
4 700
Rehoboth
N$000
19 000
(23 180)
(4 180)
(1 100)
(5 280)
Mariental
N$000
4 500
(3 375)
1 125
(225)
900
31 Dec. 2016
Total
N$000
53 500
(50 055)
3 445
(3 125)
320
31 Dec. 2015
Total
N$000
61 000
(51 800)
9 200
(2 400)
6 800
The year ending 2009 figures for the Barcelona operation were: revenue N$21.5 million, cost of sales
N$19 million and operating expenses of N$1.5 million.
Requirement:
a) Explain the meaning of a ʻnon-current asset for held sale and a discontinued operation.
(8 marks)
b) Explain whether the Managing Director’s directive to report Rehoboth as a discontinued
operation is justifiable.
(5 marks)
c) Assuming the managing director’s directive has been followed, re-draft the extracts from the
Statement of profit or loss and other comprehensive income for the year ended 31 December
2016 (including comparatives) in accordance with the requirements of IFRS 5, and draft a
suitable note relating to discontinued operations which would appear in the notes to the
financial statements.
(17 marks)
d) On 1 October 2016, the Directors of Kitchen Décor Ltd decided to sell a machine, used within
the Mariental operation and which was an excess to what is required. The machine had a cost of
Page 6 of 12
N$60 000 on 1 January 2014 and was expected to sell for N$25 000. A buyer was found on 20
December 2016 at that price, although the sale was not completed until after the year end. On 1
October 2016, the machine met the ‘held for sale’ criteria of IFRS 5. The company charges
depreciation on plant and equipment at 20% on cost.
Show with calculations how the above transaction should be treated in the financial statements
for the year ending 31 December 2016.
(5 marks)
Question 3 - IAS 8
(17 marks)
Rajah limited has traditionally valued its inventory using the weighted average method of valuation.
During the year ended 31 December 2016, the directors of Rajah Limited decided to change the method
of inventory valuation to the First In, First Out (FIFO) method in order to give a fairer presentation of the
company’s results and financial position.
The reported retained earnings of Rajah Limited at 31 December 2014 were N$2 500 000 and extracts
from the company’s financial statements for each of the last three years, on the basis of inventory being
valued on weighted average basis, are provided below:
Cost of sales
Profit after tax
2014
N$
830 000
50 000
2015
N$
904 000
80 000
2016
N$
968 000
105 000
Inventory valuation:
Weighted average basis
FIFO basis
275 000
296 000
257 000
294 000
304 000
365 000
Requirement:
Based on the information provided above, show how the change in inventory valuation method will be
reflected in the financial statement of Rajah Limited for the year ended 31 December 2016. (show the
movement in inventories as part of your workings).
(17 marks)
Page 7 of 12
Question 4 – IAS 24 Related parties disclosures
(12 marks)
Choose the letter(s) that represent the correct answer.
a) Group of companies are considered to be related parties:
A. Sometimes
B. Never
C. Always
b) What is the likely response of users of financial statements to the knowledge of related parties,
their transactions and balances?
A. Ignore them
B. Adjust their assessment of risks and opportunities facing the undertaking.
C. Refuse to deal with the undertaking on principle.
c) Which of the following are related parties?
A. Major shareholders
B. Group companies
C. Key managers
D. Pension funds
E. All suppliers
F. All government departments
G. Relatives of any staff member.
END OF ASSIGNMENT 1
Page 8 of 12
ASSIGNMENT 2 (75 MARKS)
Question 1 - IAS 40: Investment property
(30 marks)
On 1 January 2017, Andy Limited acquired a property with the following details:
Purchase price
Land: ERF 250, Hosea Kutako
Office building thereon
Repairs and maintenance incurred for year
N$
800 000
2 100 000
60 000
Approximately 5% of the floor space is used as the administrative head office of the entity while the remainder of
the building is leased out in terms of a non-cancellable operating lease to a financial institution at a monthly rental
of N$40 000 for a period of ten years commencing on 1 January 2017. The property (land and office building) can
only be sold as one complete unit.
The entity values investment property using the fair value model. On 31 December 2017, the end of the reporting
period, the above property was valued by an independent valuer who holds a recognised and relevant professional
qualification and has recent experience in the location and category of the property being valued. The valuer
determined the fair value of the property based on observable process for similar property, adjusted for the
condition and location of the asset. The fair value was determined as follows:
N$
Land
1 000 000
Building
3 000 000
Profit before tax before taking all of the above into account, amounted to N$3 000 000 for the reporting
period ended 31 December 2017. Ignore all forms of taxation.
Requirement:
a) Discuss (explain) how the property should be classified in terms of IFRS 40, Investment
properties.
(5 marks)
b) Assuming the property qualifies to be investment property in terms of IFRS40, journalise all the
events and transactions (including cash transaction) above to recognise the property in the
accounting records of Andy Limited for the reporting period ended 31 December 2017. Journal
narrations are required.
(12
marks)
c) Disclose the information above in the following notes to the financial statements of Andy
Limited as at 31 December 2017 according to IFRSs:
1. Accounting policy
2. Profit before tax
3. Investment property (showing all calculations)
(13 marks)
Page 9 of 12
Question 2 - IAS 33: Earnings per share
(35 marks)
a) The issued share capital of NamPost Limited, a publicly listed company, at 31 March 2014 was
N$10 million. Its shares are denominated at 25 cents each. NamPost Limited’s earnings
attributable to its ordinary shareholders for the year ended 31 March 2014 were also N$10
million, giving an earnings per share (EPS) of 25 cents.
Year ended 31 March 2015
On 1st July 2014 NamPost issued eight million ordinary shares at full market value.
On 1st January 2015, a bonus issue of one new ordinary share for every four ordinary shares held
was made. Earnings attributable to ordinary shareholders for the year ended 31st March 2015
were N$13 800 000.
Year ended 31 March 2016
On 1st October 2015, NamPost made a rights issue of two new ordinary shares at a price of
N$1.00 each for every five ordinary shares held. The offer was fully subscribed. The market price
of NamPost ordinary shares immediately prior to the offer was N$ 2.40 each. Earnings
attributable to ordinary shareholders for the year ended 31st March 2016 were N$19 500 000.
Requirement:
Calculate NamPost’ s earnings per share for the years ended 31st March 2015 and 2016 including
comparative figures.
(26
marks)
b) On April 2016, NamPost issued N$ 20 million 8% convertible loan stock at par. The terms of
conversion (on 1 April 2019) are that for every N$100 of loan stock, 50 ordinary shares will be
issued at the option of loan stockholders. Alternatively, the loan stock will be redeemed at par
for cash.
Also on 1st April 2016 the directors of NamPost were awarded share options on 12 million
ordinary shares exercisable from 1st April 2018 at N$1.50 per share. The average market value of
NamPost ordinary shares for the year ended 31st March 2017 was N$2.50 each. The income tax
rate is 30%. Earnings attributable to ordinary shareholders for the year ended 31st March 2017
were N$25 200 000. The share options have been correctly recorded in the income statement
Requirement:
Calculate NamPost Limited’s basic and diluted earnings per share for the year ended 31st March
2017 (Comparative figures are not required).
(9 marks)
You may assume that both the convertible loan stock and the directors’ options are dilutive.
Page 10 of 12
Question 3 – IFRS 8 Operating segments
(6 marks)
Choose the letter(s) that represent the correct answer.
a) Segments based on the structure of an undertaking’s internal organisation have other significant
advantages:
(i)
An ability to see an undertaking ‘through the eyes of management’ enhances a user’s ability
to predict actions or reactions of management, which can significantly affect the
undertaking’s prospects for future cash flows.
(ii)
As information about those segments is generated for management’s use, the incremental
cost of providing information for external reporting should be relatively low.
(iii)
Practice has demonstrated that the term ‘industry’ is subjective. Segments based on an
existing internal structure should be less subjective.
(iv)
Earnings per share (EPS) calculations can be compared between segments.
A. (i) and (ii)
B. (i) and (iii)
C. (i) to (iv).
b) An operating segment is a component of an undertaking:
(i)
that engages in business activities from which it may earn revenues and incur expenses
(including revenues and expenses relating to transactions with other components of the
same undertaking);
(ii)
the operating results of which are regularly reviewed by the undertaking’s chief
operating decision-maker to make decisions about resources to be allocated to the
segment and assess performance;
(iii)
for which discrete financial information is available;
(iv)
that is taxed separately from other components.
A. (i) and (ii)
B. (i) to (iii)
C. (i) to (iv)
Question 4 – IAS 10 Events after the reporting period
(4 marks)
An entity had its financial statements approved by the directors on 1 March 2017. According to IAS10
Events after the reporting period, which of the following would be a non-adjusting item in the financial
statements at 31 December 2016?
(i)
(ii)
A customer owing N$52 000 at the year-end was declared bankrupt in January 2017.
Inventory with a sales value of N$110 000 in February, was disclosed at a cost of N$125 000
on 31 December 2016.
Page 11 of 12
(iii)
(iv)
A.
B.
C.
D.
On 1 February 2017, a fraud carried out by the Trade Receivables Clerk was discovered. The
Trade Receivables were overstated by N$30 000 at 31 December 2016.
A fall in market value of investments after the year end.
All of the above
(i) and (iv) only
(iii) and (iv) only
(iv) only
END OF ASSIGNMENT 2
Page 12 of 12
Programme(s)
BAcc, BEd, ADPT
2017
SEMESTER (2)
[FINANCIAL ACCOUNTING 2B]
[AFE3782]
DUE DATES
Assignment 1
Assignment 2
Assignments
Resubmissions
Vacation School
28 July 2017
01 September 2017
29 September 2017
29 August- 01 September 2017
Page 1 of 12
Only Semester 2 modules
Only Semester 2 modules
All assignments of Semester 2
modules
All CODeL Programmes
2017
Assignments
[Financial Accounting 2B – AFE3782]
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.
Timely submission of all assignments on or before the given due date is crucial for the timely calculation of your CA
mark and determining admission to exams. Take note that assignments should never be submitted directly to
individual tutors or any other staff members of the University of Namibia.
Page 2 of 12
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/apadocumentation.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:
Alfred Makosa
081 368 2936
makosaa@gmail.com
Charlene Kaereho
061-2063729
ckaereho@unam.na
Josua Lukas (Matati)
065-2232267
ljosua@unam.na
For Subject content related matters only
Student Support
Lecturers/Coordinators:
Distance Education Officer:
lxoagus@unam.na
Lizzy Xoagus
061-2063608
– not ixoagus but l (L) for
Lizzy
Moyyo Jussy
061-2063715
jmoyyo@unam.na
Kooper G.
061-2063249
gkooper@unam.na
Assignment marks
Examination Officer:
Examination Matters
eLearning Coordinator:
NOTE: For additional information consult the CODeL Prospectus and UNAM General Information and Regulations
Prospectus.
Page 3 of 12
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.
Assignment 1 (94 marks)
Question 1 – IAS 27 consolidated and separate financial statements
The following are statements of financial position for Arc and Curve as at 31 December 2016.
Assets
Non-current assets
Property, plant and equipment
Available for sale investments (see note 1)
Arc
Curve
N$000
N$000
16 000
4 000
12 000
4 000
4 000
-
Current assets
6 400
2 000
Inventories
Trade receivables
Cash and cash equivalents
2 200
3 400
800
800
900
300
Total assets
22 400
6 000
Equity and Liabilities
Equity
17 700
5 000
10 000
7 500
200
1 000
4 000
-
Non-current liabilities
2 700
-
Long terms borrowings
Current liabilities
Total liabilities
2 700
2 000
4 700
1 000
1 000
22 400
6 000
Ordinary share capital of N$1 each
Retained earnings
Other components of equity (reserves)
Total equity
Total equity and liabilities
Additional information:
Page 4 of 12
(30 marks)
1. Arc acquired its 75% interest in Curve on 1 May 2016 for a consideration of N$3 800 000. On the
date of acquisition Curve had retained earnings of N$3 200 000. Arc has classified its investment
in Curve as available for sale. The other components of equity for Arc includes the subsequent
gain on the investment as at 31 December 2016.
2. The group has elected to value non-controlling interest at fair value at the date of acquisition.
On 1 May 2016, the fair value of non-controlling interest was N$1 600 000.
3. On the date of acquisition, the fair value of the net assets acquired were deemed to be the same
as their carrying amounts except the following:
The carrying amount of property, plant and equipment was N$800 000 lower than its
fair value. These assets are estimated to have an economic useful life of 16 years from 1
May 2016. It is company policy to charge a full year depreciation in the year of
acquisition and none in the year of disposal.
The carrying amount of the inventory was also estimated to be N$200 000 lower than its
fair value. All the inventories were realised by 31 December 2016.
On the date of acquisition, Curve had internally developed an intangible asset that met
the recognition criteria of IAS 38 Intangible Assets. The intangible asset was valued at
N$150 000 and is expected to generate economic benefits from 1 May 2016 to 31
December 2017.
A contingent liability that had a fair value of N$84 000 on 31 December 2016, had a fair
value of N$210 000 on 1 May 2016.
4. Following an impairment review done on 31 December 2016, it was found that goodwill from
the acquisition of Curve was impaired by 20%.
5. Curve bought goods from Arc for N$300 000. Arc makes a gross profit margin of 20% on all sales.
On 31 December 2016., half of the goods bought by Curve from Arc were still unsold.
6. There were no dividends paid by each of the entities in the year ended 31 December 2016.
Requirement:
Prepare the consolidated statement of financial position for the Arc Group as at 31 December 2016
showing all the necessary workings.
(30 marks)
Question 2: IFRS 5 Non-current assets held for sale and discontinued operations
(35 marks)
Businesses are often faced with challenging decisions whether to discontinue a part of their overall
business or close an entity. IFRS 5 Non-Current Assets Held for Sale and Discontinued Operations
provides guidance on the accounting treatment in such situations.
Kitchen Décor Ltd, whose financial year end is 31 December every year, is a company that sells kitchen
fitting in the domestic market. The company has three (3) manufacturing plants based in Windhoek,
Rehoboth and Mariental. Due to change in customer tastes, there have been a deterioration in the
performance of the Rehoboth division in the last 12 months. At a Board meeting on 14 December 2016,
Page 5 of 12
the Directors of Kitchen Decor decided, reluctantly, to cease manufacturing at the Rehoboth division
and sell the factory. The staff, customers and suppliers were immediately informed and a press release
was put in the Namibian newspaper. The managing director has approached you as the financial
accountant and has directed you that the Rehoboth operations should be shown as a discontinued
operation in the financial statements for the year ending 31 December 2016. Due to the declining
business performance of the Rehoboth division on 1 October 2016, Kitchen Décor Ltd increased
production capacity at its Windhoek division. The following are the extracts from Kitchen Décor Ltd
Statement of profit or loss and other comprehensive income:
Revenue
Cost of sales
Gross profit/(loss)
Operating expenses
Profit/(loss) before tax
Windhoek
N$000
30 000
(23 500)
6 500
(1 800)
4 700
Rehoboth
N$000
19 000
(23 180)
(4 180)
(1 100)
(5 280)
Mariental
N$000
4 500
(3 375)
1 125
(225)
900
31 Dec. 2016
Total
N$000
53 500
(50 055)
3 445
(3 125)
320
31 Dec. 2015
Total
N$000
61 000
(51 800)
9 200
(2 400)
6 800
The year ending 2009 figures for the Barcelona operation were: revenue N$21.5 million, cost of sales
N$19 million and operating expenses of N$1.5 million.
Requirement:
a) Explain the meaning of a ʻnon-current asset for held sale and a discontinued operation.
(8 marks)
b) Explain whether the Managing Director’s directive to report Rehoboth as a discontinued
operation is justifiable.
(5 marks)
c) Assuming the managing director’s directive has been followed, re-draft the extracts from the
Statement of profit or loss and other comprehensive income for the year ended 31 December
2016 (including comparatives) in accordance with the requirements of IFRS 5, and draft a
suitable note relating to discontinued operations which would appear in the notes to the
financial statements.
(17 marks)
d) On 1 October 2016, the Directors of Kitchen Décor Ltd decided to sell a machine, used within
the Mariental operation and which was an excess to what is required. The machine had a cost of
Page 6 of 12
N$60 000 on 1 January 2014 and was expected to sell for N$25 000. A buyer was found on 20
December 2016 at that price, although the sale was not completed until after the year end. On 1
October 2016, the machine met the ‘held for sale’ criteria of IFRS 5. The company charges
depreciation on plant and equipment at 20% on cost.
Show with calculations how the above transaction should be treated in the financial statements
for the year ending 31 December 2016.
(5 marks)
Question 3 - IAS 8
(17 marks)
Rajah limited has traditionally valued its inventory using the weighted average method of valuation.
During the year ended 31 December 2016, the directors of Rajah Limited decided to change the method
of inventory valuation to the First In, First Out (FIFO) method in order to give a fairer presentation of the
company’s results and financial position.
The reported retained earnings of Rajah Limited at 31 December 2014 were N$2 500 000 and extracts
from the company’s financial statements for each of the last three years, on the basis of inventory being
valued on weighted average basis, are provided below:
Cost of sales
Profit after tax
2014
N$
830 000
50 000
2015
N$
904 000
80 000
2016
N$
968 000
105 000
Inventory valuation:
Weighted average basis
FIFO basis
275 000
296 000
257 000
294 000
304 000
365 000
Requirement:
Based on the information provided above, show how the change in inventory valuation method will be
reflected in the financial statement of Rajah Limited for the year ended 31 December 2016. (show the
movement in inventories as part of your workings).
(17 marks)
Page 7 of 12
Question 4 – IAS 24 Related parties disclosures
(12 marks)
Choose the letter(s) that represent the correct answer.
a) Group of companies are considered to be related parties:
A. Sometimes
B. Never
C. Always
b) What is the likely response of users of financial statements to the knowledge of related parties,
their transactions and balances?
A. Ignore them
B. Adjust their assessment of risks and opportunities facing the undertaking.
C. Refuse to deal with the undertaking on principle.
c) Which of the following are related parties?
A. Major shareholders
B. Group companies
C. Key managers
D. Pension funds
E. All suppliers
F. All government departments
G. Relatives of any staff member.
END OF ASSIGNMENT 1
Page 8 of 12
ASSIGNMENT 2 (75 MARKS)
Question 1 - IAS 40: Investment property
(30 marks)
On 1 January 2017, Andy Limited acquired a property with the following details:
Purchase price
Land: ERF 250, Hosea Kutako
Office building thereon
Repairs and maintenance incurred for year
N$
800 000
2 100 000
60 000
Approximately 5% of the floor space is used as the administrative head office of the entity while the remainder of
the building is leased out in terms of a non-cancellable operating lease to a financial institution at a monthly rental
of N$40 000 for a period of ten years commencing on 1 January 2017. The property (land and office building) can
only be sold as one complete unit.
The entity values investment property using the fair value model. On 31 December 2017, the end of the reporting
period, the above property was valued by an independent valuer who holds a recognised and relevant professional
qualification and has recent experience in the location and category of the property being valued. The valuer
determined the fair value of the property based on observable process for similar property, adjusted for the
condition and location of the asset. The fair value was determined as follows:
N$
Land
1 000 000
Building
3 000 000
Profit before tax before taking all of the above into account, amounted to N$3 000 000 for the reporting
period ended 31 December 2017. Ignore all forms of taxation.
Requirement:
a) Discuss (explain) how the property should be classified in terms of IFRS 40, Investment
properties.
(5 marks)
b) Assuming the property qualifies to be investment property in terms of IFRS40, journalise all the
events and transactions (including cash transaction) above to recognise the property in the
accounting records of Andy Limited for the reporting period ended 31 December 2017. Journal
narrations are required.
(12
marks)
c) Disclose the information above in the following notes to the financial statements of Andy
Limited as at 31 December 2017 according to IFRSs:
1. Accounting policy
2. Profit before tax
3. Investment property (showing all calculations)
(13 marks)
Page 9 of 12
Question 2 - IAS 33: Earnings per share
(35 marks)
a) The issued share capital of NamPost Limited, a publicly listed company, at 31 March 2014 was
N$10 million. Its shares are denominated at 25 cents each. NamPost Limited’s earnings
attributable to its ordinary shareholders for the year ended 31 March 2014 were also N$10
million, giving an earnings per share (EPS) of 25 cents.
Year ended 31 March 2015
On 1st July 2014 NamPost issued eight million ordinary shares at full market value.
On 1st January 2015, a bonus issue of one new ordinary share for every four ordinary shares held
was made. Earnings attributable to ordinary shareholders for the year ended 31st March 2015
were N$13 800 000.
Year ended 31 March 2016
On 1st October 2015, NamPost made a rights issue of two new ordinary shares at a price of
N$1.00 each for every five ordinary shares held. The offer was fully subscribed. The market price
of NamPost ordinary shares immediately prior to the offer was N$ 2.40 each. Earnings
attributable to ordinary shareholders for the year ended 31st March 2016 were N$19 500 000.
Requirement:
Calculate NamPost’ s earnings per share for the years ended 31st March 2015 and 2016 including
comparative figures.
(26
marks)
b) On April 2016, NamPost issued N$ 20 million 8% convertible loan stock at par. The terms of
conversion (on 1 April 2019) are that for every N$100 of loan stock, 50 ordinary shares will be
issued at the option of loan stockholders. Alternatively, the loan stock will be redeemed at par
for cash.
Also on 1st April 2016 the directors of NamPost were awarded share options on 12 million
ordinary shares exercisable from 1st April 2018 at N$1.50 per share. The average market value of
NamPost ordinary shares for the year ended 31st March 2017 was N$2.50 each. The income tax
rate is 30%. Earnings attributable to ordinary shareholders for the year ended 31st March 2017
were N$25 200 000. The share options have been correctly recorded in the income statement
Requirement:
Calculate NamPost Limited’s basic and diluted earnings per share for the year ended 31st March
2017 (Comparative figures are not required).
(9 marks)
You may assume that both the convertible loan stock and the directors’ options are dilutive.
Page 10 of 12
Question 3 – IFRS 8 Operating segments
(6 marks)
Choose the letter(s) that represent the correct answer.
a) Segments based on the structure of an undertaking’s internal organisation have other significant
advantages:
(i)
An ability to see an undertaking ‘through the eyes of management’ enhances a user’s ability
to predict actions or reactions of management, which can significantly affect the
undertaking’s prospects for future cash flows.
(ii)
As information about those segments is generated for management’s use, the incremental
cost of providing information for external reporting should be relatively low.
(iii)
Practice has demonstrated that the term ‘industry’ is subjective. Segments based on an
existing internal structure should be less subjective.
(iv)
Earnings per share (EPS) calculations can be compared between segments.
A. (i) and (ii)
B. (i) and (iii)
C. (i) to (iv).
b) An operating segment is a component of an undertaking:
(i)
that engages in business activities from which it may earn revenues and incur expenses
(including revenues and expenses relating to transactions with other components of the
same undertaking);
(ii)
the operating results of which are regularly reviewed by the undertaking’s chief
operating decision-maker to make decisions about resources to be allocated to the
segment and assess performance;
(iii)
for which discrete financial information is available;
(iv)
that is taxed separately from other components.
A. (i) and (ii)
B. (i) to (iii)
C. (i) to (iv)
Question 4 – IAS 10 Events after the reporting period
(4 marks)
An entity had its financial statements approved by the directors on 1 March 2017. According to IAS10
Events after the reporting period, which of the following would be a non-adjusting item in the financial
statements at 31 December 2016?
(i)
(ii)
A customer owing N$52 000 at the year-end was declared bankrupt in January 2017.
Inventory with a sales value of N$110 000 in February, was disclosed at a cost of N$125 000
on 31 December 2016.
Page 11 of 12
(iii)
(iv)
A.
B.
C.
D.
On 1 February 2017, a fraud carried out by the Trade Receivables Clerk was discovered. The
Trade Receivables were overstated by N$30 000 at 31 December 2016.
A fall in market value of investments after the year end.
All of the above
(i) and (iv) only
(iii) and (iv) only
(iv) only
END OF ASSIGNMENT 2
Page 12 of 12