Question 3 (50 marks) The following information is available for Heritage Limite
ID: 2429047 • Letter: Q
Question
Question 3 (50 marks) The following information is available for Heritage Limited l. 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 400000 Accumulated depreciation on buildings at 01/07/20x7 Furniture at cost Accumulated depreciation as at 01/07/20x7 Vehicles at cost Accumulated depreciation as at 01/07/20x7 Investments as at 01/07/20x7 12 000 10 000 300 000 60 000 34 000 96 700 20 000 275 000 280 000 an Trade and other receivables Ordinary share capital Preference share capital Retained earnings as at 01/07/20x7 Replacement reserves 1090 Bank loan Payables 58 250 100 000 33 500 Additional information: 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 N$ 100000 and buildings at NS 300 000. Depreciation is written off on buildings at 4% per annum on the straight line method. Furniture and vehicles were purchased on 01 July 20x6 at N$ 80 000 and N$ 300 000 respectively. Depreciation is written off on furniture at 12,5% per year on cost and on 1. 2. Page 12 of 21Explanation / Answer
First preparing depreciation schedule as follows:
1
2
3
4
5
6
7
8
Assets
Method
The Rate of Dep
2006 June
Depn 2006-07
WDV 2007
Dep 2007-08
WDV 2008
Dep 2007-08
WDV
Accumulated Dep= 2+4+6 Column
Land
1,00,000
-
1,00,000
-
1,00,000
-
1,00,000
-
Building
SLM
4%
3,00,000
12,000
2,88,000
12,000
2,76,000
12000
2,64,000
36,000
Furniture
On Cost
12.50%
80,000
10,000
70,000
10,000
60,000
10,000
50,000
30,000
Vehicles
WDV
20%
3,00,000
60,000
2,40,000
48,000
1,92,000
38,400
1,53,600
1,46,400
New Vehicle Purchased
20%
-
-
-
-
55000
2,750
52,250
2,750
Now that we have prepared depreciation schedule, we may prepare our trial balance. Refer to working notes as stated below, this will help you to know from where we have found a particular figure:
Particulars
Opening Value
Closing Value
Notes
Accumulated depreciation on buildings at 01/07/20x7
12,000
36,000
Refer Working Note 1
Land and building at cost
4,00,000
4,00,000
Refer Working Note 1
Furniture at cost
80,000
80,000
Refer Working Note 1
Opening
Accumulated depreciation as at 01/07/20x7
10,000
30,000
Refer Working Note 1
Vehicles at cost
3,00,000
355000
Refer Working Note 1
Accumulated depreciation as at 01/07/20x7
60,000
1,49,150
Refer Working Note 1
Investments as at 01/07/20x7
34,000
42000
Given
Bank
96,700
41,700
=96700 less 55000 on purchase of New Vehicle
Trade and other receivables
20,000
20,000
Ordinary share capital
2,75,000
775000
Refer Statement of Changes in Equity
Preference share capital
2,80,000
280000
Refer Statement of Changes in Equity
Retained earnings as at 01/07/20x7
7,000
67000
Refer Statement of Changes in Equity
Replacement reserves
58,250
58,250
Refer Statement of Changes in Equity
10% Bank loan
1,00,000
1,00,000
Payable
Trade Payables
6,000
6,000
Payable
Tax Payable
3,000
3,000
Payable
Dividend Payble
24,500
24,500
Inventories
18000
FIFO, NRV whichever is lower
Profit for the year
60,000
Now, have a look at statement of changes in equity, which has been asked in question:
Statement of Changes in Equity
Number
Opening Balance
Additions during the Year
Closing Balance
Ordinary Shares issued
2,50,000
2,75,000
5,00,000
7,75,000
Preference Share
1,60,000
2,80,000
-
2,80,000
Profit during the Year
60,000
60,000
Retained Earnings
7,000
-
7,000
Replacement Reserves
58,250
-
58,250
A Statement of Changes in equity shows Movement in Shareholder’s funds during Year. We have not made adjustment of Dividend payable as same has not been paid yet.
1
2
3
4
5
6
7
8
Assets
Method
The Rate of Dep
2006 June
Depn 2006-07
WDV 2007
Dep 2007-08
WDV 2008
Dep 2007-08
WDV
Accumulated Dep= 2+4+6 Column
Land
1,00,000
-
1,00,000
-
1,00,000
-
1,00,000
-
Building
SLM
4%
3,00,000
12,000
2,88,000
12,000
2,76,000
12000
2,64,000
36,000
Furniture
On Cost
12.50%
80,000
10,000
70,000
10,000
60,000
10,000
50,000
30,000
Vehicles
WDV
20%
3,00,000
60,000
2,40,000
48,000
1,92,000
38,400
1,53,600
1,46,400
New Vehicle Purchased
20%
-
-
-
-
55000
2,750
52,250
2,750
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.