FACULTY OF COMMERCE,

MANAGEMENT & LAW

DISTANCE MODE ASSIGNMENT
LETTER

Old Curriculum
Academic Year 2025
Semester (1)
[Financial Accounting 2A- AFE3781]

A MUST, TO READ THE ENTIRE

DOCUMENT

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 FACULTY OF COMMERCE, MANAGEMENT AND LAW

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ACCOUNTING, ECONOMIC & MANAGEMENT

SCIENCES

SCHOOL OF ACCOUNTING CORE DATES FOR 2025 FIRST SEMESTER

MONTH DATES ACTIVITIES

Creation of Moodle courses for Distance and Online mode

February
17-Feb Semester 1 Lectures Commences
28-Mar Due date: Assignment 1
March 29-31 Mar Grace Period for Assignment 1

7-11 April Test 1 week (online)

APRIL
22-25 April Compulsory Virtual Vacation School
02-May Due date: Assignment 2
03-05 May Grace Period for Assignment 2
May
12-16 May Test 2 Week (online)

02-18 JUNE FIRST OPPORTUNITY EXAMINATION (OLD CURRICULUM)

09-29 JUNE FIRST OPPORTUNITY EXAMINATION (NEW CURRICULUM)
JUNE& JULY
23 JUNE- 04 JULY SECOND OPPORTUNITY EXAMINATION (OLD CURRICULUM)
27 JUNE- 09 JULY SECOND OPPORTUNITY EXAMINATION (NEW CURRICULUM)

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1. Staff Contact Information

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 Module/Subject content related matters, Mr Frans Hamunime mungwarafrans@gmail.com
Assignments marks and CA marks queries
Student Support Coordinator:
Assignment due dates, Availability of Ms. Albertina Nelumbu 0612063721 anelumbu@unam.na
assignments, Unmarked assignments, Vacation
schools

Examination Officers: 061-

Desley Goses (WHK) dgoses@unam.na
2064881
For Exam marks and exam timetable, exam
related matters All exam officers at respective
campuses assist students of
those campuses

NOTE: For additional information consult the Prospectus and UNAM General Information and
Regulations Prospectus.
Please make sure that you read the Distance Student Letter Information on Moodle

ASSIGNMENT SUBMISSION INFORMATION:

No hard copies are allowed, all assignments are to be uploaded through Moodle.
 Assignments should be submitted in PDF – only. Kindly save your assignments in PDF format
 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.

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 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 allows you to double-check
all the nitty-gritties.
NO LATE SUBMISSIONS WILL BE TOLERATED. NO LATE submission due to not adhering to the
above advice or guidance WILL BE ACCEPTED nor ENTERTAINED. Please try to submit your
assignments and attempt all tests to avoid any inconveniences

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2025 Distance Mode Assignment

[Financial Accounting 2A- AFE3781 ]
Dear Student,

Welcome to the University of Namibia. We are confident that your studies and hard work will be
rewarded with success. We kindly advise that you obtain all the relevant information and booklets
available for distance students from your Moodle platform (including the 2023 Student Information
Letter, Online Assignment Submission Guide and other documents). These documents will
provide guidance on how to approach your studies and will guide you through your study materials as
well as providing useful administrative information in submitting assignments.

2. 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
as well as browse the Internet in general. 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 available on Moodle.

3. Collaborative Learning
Unam avails all your modules through Moodle, enabling you to interact with your fellow students online
through forum discussions and chats. You can use the same platform to engage with your lecturers and
tutors regarding academic support. Please take advantage of Moodle to avoid isolation and strengthen
your interaction with colleagues, ask for help, and share/receive resources to aid your learning process.
See below how to access forum discussions on Moodle:

Figure 1: Forums in courses

4. 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 understood the questions in order to answer them correctly. It is your responsibility
to make sure that every page of the completed assignment is correctly numbered before submitting
your assignment.
As from 2017, ALL assignments are 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 outlines, course notes and other learning materials that your lecturer/tutor may choose to
share with you. Moodle is accessible here: http://elearning.unam.edu.na. You should complete and
submit all assignments on or before the given due date in the assignment letter if you wish to obtain
your CA marks and qualify for examinations. UNAM always updates its assignment covers on an annual
and semester basis. Please ensure that you have used the latest assignment cover. The latest
assignment cover is availed on each course on Moodle.
A user guide is available on how to submit your assignment in each module on the Distance Education
Common Space and you can access it on the Online Support system. Pay close attention to the
following key points listed at the beginning of the guide on:

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4.1 How you would know when you have successfully submitted your
assignment: that is when the submission status shows “Submitted for grading”

Figure 2: Assignment submission status

MAKE SURE THE SYSTEM GIVES YOU A CONFIRMATION OF SUBMISSION by the

submission status shown as "Submitted for grading" when done. If that status is NOT
displayed when done, IT DOES NOT COUNT AS A SUBMISSION.

3.2 Errors to avoid when submitting your assignment (committing these errors may
result in you failing to submit your assignments and therefore potentially failing your
course)

a. You are submitting on the correct Module/Course

b. You have selected and uploaded the correct Assignment document from your
computer
c. You are submitting the correct Assignment number for the respective activity (i.e.
Assignment 1, 2, etc.)

3.3 How to check the assessment feedback when your assignment has been graded.

5. Due Dates
All assignment due dates for 2025 are published on second page of this assignment letter. With the
shift from manual to online assignment submission since 2017, due dates are automated and non-
negotiable. This means that you would be required to submit your assignments ON or BEFORE the
due date set on your assignment (before 11h55 PM). After the date has passed (i.e. 12h00AM of the
next day) the assignment submission will be disabled, and you would no longer be able to submit
your assignment. Please note that assignment submissions will be open long before the due dates.
Please note that your assignment due dates are on page 2 of this Tutorial Letter. Use this assignment
due dates to set up your calendar tool on your mobile phone or computer to set reminders for yourself
and manage your time. Another way to keep pace with due dates, is by regularly visiting your Timeline
of each of your courses on Moodle on the Course Overview. Also download the Moodle mobile app to
access Moodle on your mobile phone or tablet and have access to notifications about due dates at your
fingertips from Google Play Store for Android or Apple App Store for IOS.

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6. Submission of Assignments
Due to challenges with Internet connectivity and speed, large files may take too long to upload, which
is a big risk if you wait until the last minute to submit your assignments. You are therefore strongly
advised NOT to wait until the final hours of the due dates to submit your assignments to avoid
disappointments. You are also advised to ensure that you are in an area with good Internet connectivity
when submitting your assignments. Timely submission of all assignments on or before the given due
date is crucial for the timely grading and processing of your CA marks and determining admission to
exams.
Take note that assignments should never be submitted directly by email or hard copy to
individual tutors or any other staff members of the University of Namibia.

7. Medical and death are the only reasons accepted for the late submission of assignments.
Late submission of assignments will only be approved 7 days (including public holidays and
weekends) after the due date of an assignment. Valid documentary proof must be attached as part of
the assignment before any late submission will be considered. Late submission without valid
documentary proof attached to the assignment will be returned unmarked and may not be resubmitted
for marking. Travelling and attendance of workshops, job related activities and conferences may
not be used as an excuse for the late submission of assignments. All late submission request must be
forwarded to the Student support coordinator for approval.

8. Academic Support
One every Moodle course there is an embedded Academic Support section with materials to assist you
with your writing process (see Figure 3 below). Go through the videos in order to enhance your writing
process and submit better quality assignments.

Figure 3: Academic Support tutorials

9. Grace Period
A grace period refers to three (3) additional days added after your assignment due
date. The purpose of this grace period is to provide each student with time to verify
and or to make amendments to assignments already submitted. These changes may
include correcting errors like submitting a file to a wrong module or on a wrong
assignment; submitting a wrong file; losing internet connectivity, etc. An example
would be that a student attempting to submit an assignment and they lose internet
connection would still be able to try again the day after at a different place or when the
connection has been restored.

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10. 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 Academic Integrity has been provided to you
on every course on Moodle. Please note that plagiarism which includes copying and
pasting information from the Internet would not be tolerated, shall result in your
assignments declared null and void and graded as a “0”. All assignments submitted
through Moodle would be checked for plagiarism using plagiarism detection software.
You are therefore strongly urged to acknowledge EVERY source that you use for your
assignment by using the appropriate citations and references following the 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 similarity scores or with evidence of clear attempts to
cheat such as submitting an assignment that is not your own would result in a zero (0)
grade.

11. Vacation schools

Attending vacation school is COMPULSORY and the vacation school timetable will be made
available through the UNAM Moodle

12. My UNAM Portal and Moodle

We recommend that you regularly (at least twice a week) access your “My UNAM
Portal” (http://my.unam.edu.na) for your registration status and information, and
Moodle (https://elearning.unam.edu.na ) for your learning and assessment
information.

Also visit the Distance Education Common Space on Moodle where you can find all
necessary information and user manuals related to your distance mode studies and
also engage with other students studying on distance mode. See additional
information under Section 11 below.

13. Online Support (Ticketing) System

An online support system is provided where you can report some of the issues that you may experience
regarding your studies. This system is easily accessible from the Moodle LMS system.

Figure 4: Online ticketing system

You can also make use of the Online Support (Ticketing System) for queries to be responded to by
the responsible person within 48 hours. We recommend you use this system for Help Topics or issues
listed on the system rather than email or telephone calls.
14. Online information, Tutorials and Distance Education Common Space
Information and Tutorials are provided in each course on the Moodle Learning
Management System which you should first familiarise yourself once you first access
your courses.

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Figure 5: Info-Tutorials on Moodle

Indicated in Figure 4 above, the Distance Student Orientation provides video tutorials on various
activities you would perform such as submitting your assignments, converting your documents into pdf
format, changing your email address, how to check your results when assignments have been graded
and so on.
Updates and information with regard to your studies and related events would be shared in the Distance
Education Common Space which you can access from any course as shown in screenshot below. All
students studying on distance mode are linked this the space where you can collaborate or discuss
general issues.

Figure 6: Distance Education Common Space

You will also find the Student Information Letter, your Vacation School Timetable and User Guides in
the Distance Education Common Space.

Serious offence not tolerated at all

Note well: Plagiarism
Plagiarism is “the wrongful appropriation or purloining, and publication as one’s own, of the ideas, or the
expression of the ideas of another” (OED). All published and unpublished material, whether in manuscript, printed
or electronic form, is covered under this description.
The Proctors’ Disciplinary Regulations concerning conduct in examinations (see Part 19.4. and 19.5, p. 52) state
that ‘No candidate shall present for an examination as his or her own work any part of the substance of another
person’s work. In any written work (whether thesis, dissertation, essay, coursework, or written examination, or
assignment) passages quoted or closely paraphrased from another person’s work must be identified as quotations
or paraphrases, and the source of the quoted or paraphrased material must be clearly acknowledged.’ In all written
work students must be vigilant in citing the work they have referred to or quoted from (please see further Appendix
D). Examples of plagiarism and detailed advice as to how to avoid it are given on
http://www.admin.ox.ac.uk/edc/goodpractice/: you are strongly advised to consult this website.

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It has been observed that some students merely download information from the Internet, copy verbatim from other
printed sources (including the Study Guide, employ other people to do their assignments for them, or plagiarise
each other’s assignments (either directly, that is, word-to-word, or through a re-arrangement of words or
paragraphs in order to deceive the tutor or marker).
These practices constitute very serious academic offences of academic dishonesty, alternatively, intellectual fraud,
which attract very serious and heavy penalties. Students must desist from such practices. Such students may score
very high marks but invariably perform very poorly in examinations. It is in the interest of such students to
endeavour to exercise their own intellectual faculties, do their own research, and personally do the set assignments.

No hardcopies are allowed, all assignment are to be uploaded through Moodle.

 Assignments should be submitted in PDF – only. Kindly save your assignments in PDF format
 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 allows you to double-check
all the nitty-gritties.
NO LATE SUBMISSIONS WILL BE TOLERATED. NO LATE submission due to not adhering to the
above advises or guidance WILL BE ACCEPTED nor ENTERTAINED.

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Faculty Commerce, Management & Law

School School of Accounting

Subject Financial Accounting 2A

Subject Code CAFE 3781

Assessment type Part-time Assignment 2

Marks 100

ASSIGNMENT 2 (2025)

F. Hamunime

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QUESTION 1 15 MARKS

A company that manufactures jeans incurred the following expenses during the year ended
31 March 2018:
N$
Raw material purchases 400 000
Direct wages paid1 750 000
Supervisors' wages2 100 000
Wage payroll expense3 40 000
Factory rental 800 000
Factory repairs and maintenance 20 000
Selling expenses 1 000
Electricity - offices 5 000
Electricity - factory 15 000
Administration costs 65 000
ADDITIONAL INFORMATION:
1. During the year the workers were on a go-slow strike and productivity was 70% of normal
time. The Company still had to pay 100% of the wages, leading to wastage of both labour
costs and overhead costs.
2. The Supervisors are all paid the same wages. 60% are employed in the factory and 40%
in administration.
3. The wage payroll expense of N$ 40 000 is split between manufacturing and administration
based on the ratio of wages (direct wages and supervisors’ wages) capitalised against
inventory to those expensed.
4. The company uses all of its plant, which cost N$ 240 000 three years ago, in the
production of jeans.
5. The company's delivery vehicle cost N$100 000 three years ago. The vehicle is used
exclusively to deliver goods to the company's major customers.
6. Depreciation is computed on the straight-line method, at 20% p.a. on plant, and 25% p.a.
on vehicles.
7. The company managed to produce (and has budgeted to produce) 20 000 pairs of jeans
for the year ended 31 March 2018, despite the go-slow strike.
8. Finished goods inventory consisted of 2 000 pairs of jeans at 31 March 2018 (2017: nil).
9. Raw material on hand at 31 March 2018 amounted to 20% of the raw materials purchased
during the year (2017: nil).
10. There is no work in process (closing and opening) and no consumable stores (closing and
opening).
11. The company has a policy of capitalising all costs permitted by IFRS.
12. The company has a policy to add the cost of wastage to the cost of sales.

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REQUIRED:

Calculate the value of the closing inventory at 31 March 2018.

(15)

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Question 2 40 MARKS
On 1 January 2021, Peacetalk Ltd acquired 75% of Sail Ltd for N$150 000. The following
financial statements of these two companies were presented to you:
STATEMENT OF FINANCIAL POSITION ON 31 DECEMBER 2023
PEACETALK SAIL
N$ N$
ASSETS
Non-current assets 1 062 700 227 250
Property, plant and equipment 897 700 227 250
Investment in Sail Ltd 165 000 -

Current assets 294 700 81 000

Inventory 14 000 11 000
Trade- and other debtors 69 800 70 000
Bank 210 900 -
TOTAL ASSETS 1 357 400 308 250

EQUITY AND LIABILITIES

Equity 1 098 900 247 000
Share capital (N$1 shares) 1 000 000 200 000
Mark-to-market reserve 15 000 -
Retained earnings 50 900 35 000
General reserve 33 000 12 000

Non-current liabilities 178 500 6 000-

Loan from Finance Bank 174 000 -
Deferred tax liability 4 500 6 000

Current liabilities 80 000 55 250

Trade- and other creditors 80 000 50 000
Bank overdraft - 5 250
TOTAL EQUITY AND LIABILITIES 1 357 400 308 250

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE

YEAR ENDED 31 DECEMBER 2023
PEACETALK SAIL
N$ N$
Sales 710 900 249 700
- Cost of sales (326 600) (199 760)
Gross profit 384 300 49 940
Other income 39 500 11 250
Dividends received from Sail Ltd 3 750 -
Other expenses (52 300) (13 800)
Depreciation
- Equipment (73 500) (3 250)
- Motor vehicles (200 000) (1 500)
Selling and admin expenses (15 000) (5 500)
Profit before tax 86 750 37 140
Tax expense (26 100) (11 140)

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Profit for the year 60 650 26 000
Other comprehensive income
Mark-to-market reserve 15 000 -
Total comprehensive income for the year 75 650 26 000

EXTRACT FROM THE STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED
31 DECEMBER 2023
Mark-to- Retained earnings General reserve
market
reserve
PEACETALK PEACETALK SAIL PEACETALK SAIL
N$ N$ N$ N$ N$
Balance on 1 January - 12 000 18 000 23 000 8 000
2013
Profit for the year - 60 650 26 000
Dividends - (12 000) (5 000)
Transfer to general - (10 000) (4 000) 10 000 4 000
reserve
Mark-to-market reserve 15 000 -
Balance on 31 15 000 50 650 35 000 33 000 12 000
December 2013

Additional information:

1. At acquisition, Sail Ltd’s retained earnings and general reserve amounted to N$8 000 and
N$5 000 respectively.

2. It is the policy of Peacetalk Ltd to show all non-controlling interests at fair value. On date
of acquisition, the fair value of the non-controlling interest in Sail Ltd amounted to
N$140 000.

3. Included in the property, plant and equipment of Peacetalk Ltd is equipment bought from
Sail Ltd on 1 June 2023 for N$18 200.

The details of this equipment (as originally purchased by Sail Ltd) are as follows:

 Purchase date: 1 January 2008

 Cost price: N$20 500
 Depreciation: 10% per year, straight line (Peacetalk considers this rate to be
fair)

4. Since date of acquisition, Sail Ltd sold inventory to Peacetalk Ltd at cost plus 20%. The
total sales for the current year amounted to N$35 000.

Closing inventory in Peacetalk Ltd’s records relating to the purchases from Sail Ltd was
as follows:

2022 N$ 7 800
2023 N$10 800

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REQUIRED:

a) Discuss the key principles of IFRS 10. In your response discuss the definition of control,
the criteria for consolidation and the implications for group financial statements. (10)

b) Prepare the at acquisition date pro-forma journal entries for the Peacetalk Ltd group. (6)

c) Prepare the consolidated statement of changes in equity of Peacetalk Ltd and its
subsidiary company on 31 December 2023 in accordance with International Financial
Reporting Standards (IFRS) (show all your workings). (24)

Comparative amounts are not required.

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Question 3 20 MARKS

The Question consists of different parts which are not related in any way.
PART A
Molt Limited (“Molt”) is in the computer application software development business. They are
constantly on the outlook for new developments that can be sold to smartphone users.

Salif Mpho has spent the past three years in developing a bank application (“Bapp”) that will
dramatically change the way internet banking is done. He decided to present his prototype of
“Bapp” as “for sale” to Molt’s Managing Director, Sir Ibra, who immediately realised that this
app will sell in millions, once completely developed.

Salif incurred expenses of N$745 340 in developing “Bapp” up to 31 March 2022. Research
constituted N$145 340 of this amount, and the balance was development cost. Bob offered
Salif an appointment in the post as Chief “Bapp” developer at a monthly salary of N$50 000
starting 1 April 2022. He also agreed to purchase the “Bapp” for N$900 000 from Salif. Salif
spent one month training staff of Molt on how to further develop “Bapp” and development
started on 1 May 2022.

A summary of the payments made to purchase and develop “Bapp” is as follows for the year
ended 31 March 2023:

Date Paid To: Description of expenditure Amount

(N$)
1 Apr 2022 Salif Mpho Purchase of “Bapp” 900 000
1 Apr 2022 - 31 Salif Mpho Salary 600 000
Mar 2023
1 Apr 2022 - 31 “Bapp” Salaries (spread evenly over 12 2 400 000
Mar 2023 development staff months @ N$200 000 per month)
1 Aug 2022 Graham Gordan Installation advisor 200 000
31 Aug 2022 Cuco Caterers Launch party of ‘Bapp” 80 000
31 Aug 2022 Adco advertising Announcement in media 150 000
agency countrywide of release of “Bapp”
1 Sept 2022 Internet Kings Development of website on which 1 500 000
“Bapp” can be purchased

Additional information:

1. Molt uses the revaluation model to account for intellectual properties such as
applications, and the cost model for websites. Revaluations are done annually at the
end of the financial year. As there is an active market in the buying and selling of
applications for smartphones, the fair value of the “Bapp” at 31 March 2023 was
determined as N$2 000 000.
2. The “Bapp” was completed 31 August 2022 and sales started on 1 September 2022.
3. Salif and the development staff were actively involved in the support and maintenance
of “Bapp” for the period 1 September 2022 to 31 March 2023.
4. The estimated life of the “Bapp” application as well as the website is three years each.

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5. The payment to Graham Gordan was necessary to finally commission the “Bapp”
application

PART B
MBW is a motor vehicle dealer that sells luxurious cars to the public. One of the cars was
sold for N$300 000. The car was ordered by the buyer on 1 May 2017 and was picked up
from the dealer on 1 July 2017. MBW’s year-end is 31 December. The selling price includes
an amount of N$20 000 in respect of a 3-year service plan. Because it is probable that the
maintenance costs will increase as the car becomes older, MBW estimates the following
schedule of service costs that they will incur over this 3-year period:

Period Estimated service costs

01/07/2017 to 31/12/2017 N$2 000

01/01/2018 to 30/06/2018 N$2 200

01/07/2018 to 31/12/2018 N$2 500

01/01/2019 to 30/06/2019 N$2 700

01/07/2019 to 31/12/2019 N$3 000

01/01/2020 to 30/06/2020 N$3 300

Total N$15 700

PART C
Wine Ltd is a company that sells expensive wines to the exclusive buyer. Points are earned
when the customer spends a certain amount. The points can be redeemed for more wine. For
the year ended 31 December 2018, 500 points were granted and Wine Ltd expected at that
stage that only 420 points in total would be redeemed for more wine. The fair value of each
point is N$40 (this value already takes into account the number of future expected
redemptions). Total sales of wine for the year ended 31 December 2018 amounted to N$600
000 (on credit). During the year ended 31 December 2018, 240 points were redeemed for
more wine. During the year ended 31 December 2019, a further 100 points were redeemed
and management re-estimated that the total number of points that would be redeemed will
amount to 400 points

MARKS
REQUIRED: Sub
Total
total

(a) Journalise all of the above transactions in the books of Molt Limited for 10
the year ended 31 March 2023 (Refer to PART A)

b) Calculate the amount of revenue in respect of the car that was sold that
must be recognised for the year ended 31 December 2017, without

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listing and applying the recognition and measurement principles of 5
IFRS 15. (Refer to PART B)

c) Journalise the above transactions ( Refer to PART C) for the financial 5

years ended 31 December 2018 and 2019.

Total marks 20

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QUESTION 4 25 MARKS
Fortunate Limited, involved in the transportation of perishable goods, held the following assets
at 28 February 2021, the end of its previous financial year:

Asset Note Date of Total cost Residual Useful life

acquisition N$ value
N$
Vehicles 1 1 March 2019 1 600 000 – 10 years
Stockroom 1, 2 31 August 2019 2 370 000 570 000 8 years
Building 1, 3 1 March 2020 1 800 000 150 000 25 years
Land – plot 38 1, 4 1 April 2019 400 000 – Unlimited

Notes (additional information):

1. The vehicles and Stockroom are recognised on the cost model. Buildings classified as
property, plant and equipment are accounted for in accordance with the revaluation
model, using the gross replacement method. Where applicable, assets are depreciated
over their respective estimated useful lives to their residual values. Any revaluation
surplus is released to retained earnings as the relevant asset is utilised over its useful
life.

2. During the current financial year, the remaining useful life of the Stockroom, used for
cold storage purposes, was re-estimated to be four years from the start of the current
financial year. It was also determined that the estimated residual value decreased to
N$450 000. Changes in estimates are accounted for using the re-allocation method. The
fair value of this property was N$2 500 000 on 28 February 2022.

3. The operations of the company are run from the building acquired on 1 March 2020. On
1 March 2021 Mr Abraham, an expert appraiser, valued the property at a fair value (net
replacement value) of N$2 223 600, with reference to similar properties in the same area
and which are in a similar condition. The fair value of this building at 28 February 2022
was determined as N$1 484 000. The residual value remained unchanged since the
date of acquisition.

4. The Stockroom and building are situated on plot 38, Brakewater in Windhoek. The fair
value of the land was N$700 000 on 28 February 2022.

5. Fortunate Limited invested in industrial refrigerator at a cost of N$1 800 000 on 30 May
2021. Large inspections must be performed every three years on this refrigerator. The
3-year inspection was due on 1 June 2021, and was performed at a cost of N$400 000.
The previous inspection was performed at a cost of N$360 000. The refrigerator is
recognised on the cost model and is depreciated over the estimated useful life of 5 years
to a nil residual value.

6. Ignore taxation.

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 FACULTY OF COMMERCE, MANAGEMENT AND LAW

OLD CURRICULUM MODULES

REQUIRED:

a) Calculate the amount of depreciation for the Stockroom for the year ended
28 February 2022. (5)

b) Prepare all general journal entries relating to the building on plot 38 for the year ended
28 February 2022. Narrations are not required. (20)

Round all amounts to the nearest dollar.

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