[FINANCIAL ACCOUNTING 2A] Page 1 of 21 Page 1 of 21 Page 1 of 11 QUESTION 1: 20 Marks APX programmers PTY Ltd deals in developing programs legible for use in the artificial intelligence space of the...




[FINANCIAL ACCOUNTING 2A] Page 1 of 21 Page 1 of 21 Page 1 of 11 QUESTION 1: 20 Marks APX programmers PTY Ltd deals in developing programs legible for use in the artificial intelligence space of the information technology industry At 30 June 2020, APX programmers had the following projects in the pipeline Project North: Project North is involved in the development of a program that will allow human independence in the process of paying groceries in Super markets. The project has been submitted for approval to the board of directors for customer review and feasibility. However, a top IT Technician from an independent review board has identified faults in the program. The faults will cost APT Robotics N$ 15million to fix and the board of directors does not find it feasible to continue with the project. Project Sossuvlei: Project Sossusvlei is currently at stage two of the process. The project will allow users to be able to perform COVID-19 self-testing with their smartphone devices. The program has been tested on the IPhone devices and 90% of the results have come out accurate to the manual swab testing. The program is confirmed to be legible for use to IOS users only at the moment, and not to the Android users. Apple Limited has been keeping tabs on the programming progress, and are very eager to feature the program in their new Iphone15 Series. Apple Limited is prepared to fund the program, at any stage of development and are ready to assist APX with their team of highly specialized technicians in completing the program at no cost. Apple limited has entered into an agreement with APX to buy the program from them at completion of the development. Costs incurred for the period ended 30 June 2020: N$ 000 N$ 000 North Sossusvlei Material and Services 1,000.00 5,000.00 Technicians Labor 2,000.00 6,000.00 Direct overheads 100.00 3,000.00 Indirect Overheads 2,000.00 200.00 Rental of research facilities 2,000.00 5,000.00 Field research 366.00 532.00 Program test 200.00 6,000.00 Administrative Cost 100.00 100.00 7,766.00 25,832.00 Required: 1.1 Discuss the IAS 38 requirements for capitalizing development costs. 6 2.2 Discuss according to the criteria listed in 1 Whether each of the two projects qualifies to be capitalized to development costs. 8 2.3 Disclose the costs of the two projects in the financial statements of APX Robotics (Pty) Ltd as at 30 June 2020. 6 QUESTION 2: 20 Marks The below is an extract from the fixed asset register of ABC Ltd as at 31 December 2019 Date Purchase of Cost useful life Land 1-Jan-30 6,000,000.00 0 Building 28-Feb-17 2,000,000.00 20 Vehicle: 650,000.00 Toyota Hilux 1-Oct-19 350,000.00 5 Ford Ranger 30-Jun-17 300,000.00 5 Furniture and Fittings 1-May-20 150,000.00 2 Activities throughout the 2020 Financial Period: 1. New Machinery have been purchased on 01 April 2020 at a Cost of N$ 4000,000. The machinery has been installed on the 15 April 2020 and was available for use on the 01 May 2020. Machinery is the only property plant and equipment of the company that is measured according to the revaluation method. 1.1. On the 30th of October 2020 management decided to revalue the machinery due to a drastic decline in the revenue from sale of machinery produced inventory.Net replacement cost for the machine as at the 30th of October 2020 is N$2 000 000. 2. The Toyota Hilux was involved in an accident on 1 October 2020 due to the floods and was written off by the insurance company. A new vehicle has been purchased with the insurance claim on the 31st of December 2020. 3. Portions of land were sold as below: Land costing N$500 000 sold for N$700 000 to a business person. Land costing N$200 000 has been donated to a pre-school for children with learning disabilities. 4. A floor of the building costing N$600 000 has been turned into a commercial rental space for dentists. 5. Assets are depreciated on a straight line basis. 6. Residual value of 10% of cost is applied to all assets purchased in the financial period ending December 2020. Required: 2.1 Calculate and prepare Journal entries to depict depreciation for the assets for the period ended 31 December 2020 for ABC pvt Ltd. 10 2.2 Disclose the property plant and equipment information in the financial statements of ABC Ltd for the year ended 31 December 2020. 10 QUESTION 3 35 Marks Mara Travel influencers has entered into a social media influencer partnership with Namibian Amazing views group as an influencer to market the lodges of the travel company situated at all of the 13 regions of Namibia. Both parties have signed an unamendable agreement. On the 1st of January 2020 the terms of the partnership are as follows: -Mara is to visit all of the lodges under the Namibian Amazing views group. -While at the lodge, Mara is to take pictures of the lodge and post on her social media platforms. -Mara is to film a YouTube video of the lodges, touring the lodge and the activities available at the lodge as well as giving an overall review of the lodge, customer service and the experience. Should Mara not visit the lodge, she may request pictures and videos of the lodge from the marketing team to post to her social media platform. Namibian Amazing views is to make the following payments to Mara Travel Influencers upon completion of the tasks required above: -An upfront payment of N$20 000 paid upon signing of the agreement. This payment is to be refunded by Mara, should she fail to visit all the lodges of the group. -Each visit to the lodge N$5000. -Each picture posted on social media N$50. -Additional N$50 per picture with more than 50 000 likes. -Each video of the lodges posted on YouTube N$200 -Additional N$200 for every 100 000 views -Accommodation at an average of N$1 000 per lodge -Breakfast, dinner and lunch to the value of N$1000 per lodge -Lodging activities to the value of N$1000 per lodge Additional N$20 000 to be paid a year after, should sales of the lodge increase with references from Mara Travel Influencers. For the period ended 31 December 2020, Mara has performed the following: 1. Visited 3 of the 5 lodges owned by the group. 2. She has posted all the pictures of the lodges to her social media and posted a video for each visit to her YouTube channel 3. Mara has given reviews of the lodges visited as stipulated in the contract. The statistics for the lodges visited is given below: Number of pictures posted Number of social media likes Number of Youtube views Date of completion Lodge 1 15.00 65,000.00 160,000.00 30-Mar-20 Lodge 2 25 15,000.00 250,000.00 16-Jun-20 Lodge 3 25 153,000.00 500,000.00 30-Oct-20 Required: 4 Discuss whether Mara Travel Influencers may recognize her revenue under IFRS 15 for the period ended 31 December 2020. Discuss the performance obligations identified in the agreement. Calculate and allocate the transaction price of the agreement and allocate to the identified performance obligations. Prepare journals in the books of Mara Travel Influencers for the period ended 31 December 2020 Part b XYZ Marbles (PTY) Ltd has entered into agreement with Buy and Deliver (Pty) Ltd to provide the following goods to its customer in South Korea. The terms of the agreement are as below: 1. Buy and Deliver (Pty) Ltd is to arrange for the transport of the marbles from Namibia to the South Korean customer. The cost of transport will be on XYZ Marbles (Pty) Ltd 2. Buy and Deliver (Pty) Ltd is to clear all the export requirements XYZ (Pty) Ltd in Namibia. 3. XYZ Marbles (Pty) holds the risk of the Marbles stock until they reach the customer. 4. XYZ (Pty) Ltd has set the price of the Marbles at N$ 1,000,000.00. Buy and Deliver is not allowed to make any changes to the price set. The transaction has been completed as below: 01 January 2020 XYZ Marbles (Pty) Ltd completes the extraction of the marbles. 30 January 2020 Buy and Deliver arranges the transport to South Korea of the Marbles 28 February 2020 The customer receives the goods and pays over the sale amount of N$ 1,000,000 to XYZ Marbles (Pty) Ltd 28 February 2020 XYZ (Pty) Ltd pays a commission amount of N$200,000.00 to Buy and
Mar 21, 2021
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