Student number

Part A 11
Part B 5
Part C 22
To Capture 38

PART A
Dr: Land 700,000 1 1 Accuracy of the journal
Cr: Deferred Tax 151,200 1 1 Consequential Deferred Tax
Cr: Equity at acquisition 548,800
At acquisition adjustmenrt of land
Carrying amount of land:
Cost: 3 500 000
Reval: 627 200/78.4 = 800 000 Grossing up of RS
CA: 3 500 000 + 800 000 = 4 300 000 2C 2 Calculating amount
FV adjustment: 5 000 000 - 4 300 000

Dr: Share Capital (SCE) 100,000 1 1 Eliminating given Equity agianst Investment
Dr: Retained Earnings (SCE) 23,700,000
Dr: Revaluation Surplus (SCE) 627,200
Dr: Equity at Acquisition (SCE) 548,800
Dr: Goodwill (SFP) 1,524,000
Cr: Investment in House & House (SFP) 18,500,000
Cr: Non-Controlling Interest (SCE) 8,000,000 1 1 Recognising NCI
Elimination of equity at acqusition against investment and recognition of GW and NCI

Dr: Revaluation gain (SPL) 200,000 1 1 Reversal of at acquisition valuation

Dr: Revaluation gain (OCI) 500,000 1 1 Split between SPL and OCI
Cr: Land (SFP) 700,000
Post acqusition adjustment of land

Dr: Deferred Tax (SFP) 151,200.00 1 1 Consequential Journal

Cr: Income tax expense (OCI) 108,000.00 1 1 Split between SPL and OCI
Cr: Income tax expense (SPL) 43,200.00
Related tax implications
Communication: Narrations 1 1
Maximum marks (11 marks) 11 11

PART B
Share of Associates Profits
Profit for the year 690,129 1 1 Given
Depreciation (1 350 000/10) 135,000 1 1 /10
Unrealised profit (400 000 x 30/100)) (120,000) 1 1 x30/100
Realisation of profit (650 000 x 30/100) 195,000 1 1 x30/100
900,129
3 653 300 x 35% 315,045 1 1 x35%

Maximum marks (5 marks) 5 5

PART C

Consolidated Income Statement of Shop-Sharp Limited 2 2 Heading & Format

For the period ended 28 February 2024

Rand thousands 2024

Revenue 38,600,000 0.5 0.5
Cost of sales (11,276,818) 0.5 0.5
Gross Profit 27,323,182
Other Income 1,165,182 0.5 0.5
Administrative expenses (10,526,691) 0.5 0.5
Selling and distribution expenses (928,000) 0.5 0.5
Other expenses (8,310,545) 0.5 0.5
Operating Profit 8,723,128
Profit before tax 8,723,128

Revenue: 43,600,000
Intragroup sales: Checkm8te (5,000,000.00) 1 1 Accuracy
38,600,000.00

Cost of Sales: 15,898,182

Intragroup sales: Checkm8te (2,000,000.00) 1 1 Accuracy
Intragroup sales: Checkm8te (3 000 000 x 100/110) (2,727,272.73) 1 1 x 100/110
Unrealised profit - Checkm8te (5 000 000 x 40% x 50%) x 10/110 90,909.09 3 3 40% x 50% x 10/110
Undervalued inventory 15,000.00 1 1 Accuracy
11,276,818

Other Income 2,770,182

Gain on bargain purchase - Checkm8te 790,000 1 1 Accuracy
Profit on sale - NCAHFS (4 250 000 - 3 000 000) (1,250,000) 1 1 Accuracy
Dividend - Checkm8te (1 500 000 x 60%) (900,000) 1 1 Accuracy
Dividend - Exception Clothing (700 000 x 35%) (245,000) 1 1 Accuracy
1,165,182

Administrative expenses 10,526,691

Selling and distribution expenses 4,155,273

Depreciation - Building Checkm8te
2 2
=800 000/15 (53,333) /15 & Subtracts
Depreciation - Furniture & Fitting (3 000 000 x 10/110) /5 x 6/12 (27,273) 2 2 /5 & 6/12
Provision expense (2,400,000) 1 1 Accuracy
Impairment - Building (800 000 - 53 333) (746,667) 1 1 Remaining FV adjustment
928,000

Other expenses 8,310,545

Maximum Marks [22] 22.00 22.00

 Student number
Part A -
Part B 1
To Capture 1

PART A
Dr: Land (SFP) 350,000 1 Split between OCI & SPL
Cr: Revaluation (SPL) 100,000 1 SPL Amoint
Cr: Revaluation (OCI) 250,000 1 OCI Amount

Dr: Fair value Loss (SPL) 170,000 1 Accuracy of journal

Cr: Investment Property (SFP) 170,000
(620 000 - 450 000) 1 Accuracy of amount

Dr: Depreciation expense (SPL) 234,000 1 Accuracy of journal

Cr: Accumulated depreciation: Building (SFP) 84,000
Cr: Accumulated depreciation: RoU (SFP) 150,000
RoU: (1 500 000/10) = 150 000 1 /10
Building: (2 100 000/25) = 84 000 1 /25

Dr: Interest expense (SPL) 159,847 1 Accuracy of journal

Dr: Lease liability (SFP) 90,153
Cr: Bank (SFP) 250,000
n: 10 1 Inputs of calc
i: 12%
pmt: 250 000
2 input 2 1 2 input 2

Dr: Impairment expense (SPL) 304,371 1 Impairment in SPL

Dr: Revaluation loss (OCI) 233,719 1 Devaluation OCI
Cr: Land (SFP) 233,719.39 1 Adjustment to land and Acc impair
Cr: Accumulated Impairment RoUA (SFP) 224,370.61
Cr: Accumulated Impairment Building (SFP) 80,000.00

Land 1,250,000
Investment Property 450,000
Building 1,680,000
Right of Use Asset (1 500 000/10 x 8) 1,200,000 1 /10 x 8
Lease Liability (1,241,910)
3,338,090 1 Carrying amount of CGU(inlcuding lease liability
Recoverable Amount 2,800,000
Impairment 538,090 1 Calc the impairment

First Allocation of impairment Carrying Amount Allocation Carrying Amount Over allocation
Land 1,250,000 162,860.17 1,087,139.83 1 Prorata allocation
Building 1,680,000 218,884.07 1,461,115.93 138,884.07 1 Limitation of impairment
Right of Use Asset (1 500 000/10 x 8) 1,200,000 156,345.76 1,043,654.24 1 Prorata allocation
4,130,000.00 538,090.00 3,591,910.00

Second Allocation of impairment Carrying Amount Allocation Carrying Amount

Land 1,087,140 70,859.22 1,016,280.61 1 Secondary Allocation
Right of Use Asset (1 500 000/10 x 8) 1,043,654 68,024.85 975,629.39 1 Secondary Allocation
2,130,794.07 138,884.07 1,991,910.00

Maximum Marks [22] 22.00 -

PART B
Brunzo (Pty) Limited
For the year ended 30 June 2024
Extract of the Notes to the Annual Financial Statements

Note 3: Income Tax Expense

Components of Income Tax
SA Normal Tax
-Current Tax 3,527,771
-Deferred Tax (88,510.76) 1C Consequential
Total 3,439,260

Tax Rate Reconciliation

Tax on Accounting Profit 567,000 1 Accuracy
None Deductible Items
Fair value loss 6,480 1C Consequential
Building Depreciation 22,680 1C Consequential
Building Impairment loss 21,600
Legal claim 2,835,000 1C Consequential
None Taxable Items
Revaluation - land (5,400) 1C Consequential
Dividend (8,100) 1C Consequential
Taxation expense 3,439,260 1 Reconciles to Components of tax

Workings
Profit before Tax 2,100,000 1 Given

Permanent Differences 10,638,000

Revaluation - land (100 000 x 20%) (20,000) 1C 20%
Fair value loss (620 000 - 500 000) x 20% 24,000 2C 120 000 & 20%
Building Depreciation 84,000 1C Consequential
Building Impairment loss 80,000 1 Consequential
Dividend (30,000) 1 Accuracy
Legal claim 10,500,000 1 Accuracy - post adjusting

Temporary Differences 327,818

Revaluation - land (100 000 x 80%) (80,000) 1C 80%
Wear and tear - Investment Property (500 000 x 5%) (25,000) 1C Accuracy
Fair value loss (170 000 - 24 000) 146,000 1C Consequential
Interest 159,847 1C Consequential Part A
Lease payment (250,000) 1C Consequential Part A
Depreciation 150,000 1C Consequential Part A
Impairment loss 224,371 1C Consequential Part A - exclude building
Share Transaction costs (15,000) 1
Profit on sale (37 000 + 15 000) x 80% 17,600 2C Add transaction costs & 80%

Taxable Income 13,065,818 1C Taxable income

Current Tax Expense 3,527,771 1C Current Tax expense

Communication: Presentation 1 1
Maximum Marks [28] 28.00 1.00
 Student number
Part A 14
Part B 25
Part C 8
To Capture 47

PART A
Dr: Land 700,000 1 1
Cr: Deferred Tax 151,200 1 1
Cr: Equity at acquisition 548,800
Carrying amount of land:
Cost: 3 500 000
Reval: 627 200/78.4 = 800 000
CA: 3 500 000 + 800 000 = 4 300 000 2 2
FV adjustment: 5 000 000 - 4 300 000

Dr: Share Capital (SCE) 100,000 1 1

Dr: Retained Earnings (SCE) 23,700,000
Dr: Revaluation Surplus (SCE) 627,200
Dr: Equity at Acquisition (SCE) 548,800
Dr: Goodwill (SFP) 1,524,000
Cr: Investment in House & House (SFP) 18,500,000
Cr: Non-Controlling Interest (SCE) 8,000,000 1 1

Dr: Retained Earnings (SCE) 2,190,000 1 1

Cr: Non-controlling interest (SCE) 2,190,000
(31 000 000 - 23 700 000) x 30% 1 1

Dr: Revaluation gain (SPL) 200,000 1 1

Dr: Revaluation gain (OCI) 500,000 1 1
Cr: Land (SFP) 700,000

Dr: Deferred Tax (SFP) 151,200.00 1 1

Cr: Income tax expense (OCI) 108,000.00 1 1
Cr: Income tax expense (SPL) 43,200.00 1 1

Communication: Narrations 1 1
Maximum Marks [14] 14.00 14.00
PART B

Consolidated Income Statement of Shop-Sharp Limited 2 2

For the period ended 28 February 2024

Rand thousands 2024

Revenue 38,600,000
Cost of sales (11,004,091)
Gross Profit 27,595,909
Other Income 1,165,182
Administrative expenses (10,526,691)
Selling and distribution expenses (2,255,273)
Other expenses (8,310,545)
Operating Profit 7,668,582
Share of profit in associates 1,278,655 1 1
Profit before tax 8,947,237
Income tax expense (1,339,666)
Profit after tax 7,607,570

Revenue: 43,600,000
Intragroup sales: Checkm8te (5,000,000.00) 1 1
38,600,000.00

Cost of Sales: 15,898,182

Intragroup sales: Checkm8te (5,000,000.00) 1 1
Unrealised profit - Checkm8te (5 000 000 x 40% x 50%) x 10/110 90,909.09 3 3
Undervalued inventory 15,000.00 1 1
11,004,091

Other Income 2,770,182

Gain on bargain purchase - Checkm8te 790,000 1 1
Profit on sale - NCAHFS (4 250 000 - 3 000 000) (1,250,000) 1 1
Dividend - Checkm8te (1 500 000 x 60%) (900,000) 1 1
Dividend - Exception Clothing (700 000 x 35%) (245,000) 1 1
1,165,182

Administrative expenses 10,526,691

Selling and distribution expenses 4,155,273

Depreciation - Building Checkm8te
2 2
=800 000/15 53,333
Depreciation - Furniture & Fitting (5 000 000 x 60%) /5 x 6/12 (300,000) 1 1
Provision expense (2,400,000) 1 1
Impairment - Building (800 000 - 53 333) 746,667 1 1
2,255,273

Other expenses 8,310,545

Income tax expense 1,773,262

Depreciation - Building Checkm8te
1 1
=53 333 x 27% (14,400)
Unrealised profit - Checkm8te (90 909 x 27%) (24,545) 1 1
Depreciation - Furniture & Fitting 300 000 x 27% 81,000 1 1
Profit on sale - NCAHFS (1 250 000 x 21.6%) (270,000) 1 1
Undervalued inventory (15 000 x 27%) (4,050) 1 1
Impairment - Building (746 667 x 27%) (201,600) 1 1
1,339,666

Communication: Layout and format 1 1

Maximum Marks [25] 25.00 25.00
PART C

Share of Associates Profits

Profit for the year 3,500,000 1 1
Depreciation (1 350 000/10) 135,000 1 1
Income tax expense (36,450) 1 1
Unrealised profit (400 000 x 30/100)) (120,000) 1 1
Income tax expense 32,400 1 1
Realisation of profit (650 000 x 30/100) 195,000 1 1
Income tax expense (52,650) 1 1
3,653,300
3 653 300 x 35% 1,278,655 1 1

Maximum marks (8 marks) 8 8