Question3 (50 marks) The following information is available for Heritage Limited

Question

Question3 (50 marks) The following information is available for Heritage Limited: 1. The reporting period of Heritage Ltd ends on 30 June of every year The following balances are available as at 30 June 20x8 Land and building at cost Accumulated depreciation on buildings at 01/07/20x7 Furniture at cost Accumulated Vehicles at cost Accumulated Investments as at 01/07/20x7 Bank Trade and other receivables Ordinary share capital Preference share capital Retained earnings as at 01/07/20x7 Replacement reserves 10% Bank loan Payables 400 000 12 000 80 000 10 000 300 000 60 000 34 000 96 700 20 000 275 000 280 000 7 000 58 250 100000 33 500 depreciation as at 01/07/20x7 depreciation as at 01/07/20x7 Additional information 1. The buildings are occupied for the purposes of the activities of the entity and are accounted for in terms of the cost model. At the date of acquisition, 01 July 20x6, the land was valued at NS 100 000 and buildings at NS 300 000. Depreciation is written off on buildings at 4% per annurn on the straight line method. Furniture and vehicles were purchased on 01 July 20x6 at NS 80 000 and NS 300 000 respectively. Depreciation is written off on furniture at 12,5% per year on cost and on 2. Page 12 of 21

Explanation / Answer

in the given problem first we have to prepare depreciation schedule Assets Method of dep rate Jun-06 dep 2006-07 WDV 07 Dep 2007-08 WDV 08 Dep 2007-08 WDV Accumulated dep (a) (b) © (d) (e) (f) (g) (b)+(d)+(f) Land 100000 100000 100000 100000 Building straight line 4% 300000 12000 288000 12000 276000 12000 264000 36000 Furniture on cost 12.50% 80000 10000 70000 10000 60000 10000 50000 30000 Vehicle WDV 20% 300000 60000 240000 48000 192000 38400 153600 146400 new Vehicle 20% 55000 2750 52250 2750 1.2) Particulars opening value Closing value Accumulated depreciation ob building 1/7/07 12000 36000 Land & buliding at cost 400000 400000 Furniture at cost 80000 80000 Accumulated depreciation at 1/7/07 10000 30000 Vehicle at cost 300000 355000 Accumulated depreciation as at 1/7/07 60000 149150 Investment on 1/7/07 34000 42000 Bank 96700 41700 (96700-55000)new vehicle Trade and other receivable 20000 20000 ordinary share capital 275000 775000 preference share capital 280000 280000 Retained earning on 1/7/07 7000 67000 replacement reserve 58250 58250 10% Bank loan 100000 100000 trade payable 6000 6000 tax payable 3000 3000 Dividend payable 24500 24500 inventory 18000 profit of the year 60000

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