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FAC611S-FINANCIAL ACCOUNTING 201-2ND OPP- JULY 2025 |
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nAm I BIA un IVERSITY
OF SCIEnCE Ano TECHnOLOGY
FACULTY OF COMMERCE, HUMAN SCIENCESAND EDUCATION
DEPARTMENT OF ECONOMICS, ACCOUNTING AND FINANCE
QUALIFICATION: BACHELOR OF ACCOUNTING
QUALIFICATION CODE: 07BOAC
LEVEL: 6
COURSE CODE: FAC611S
COURSE NAME: FINANCIALACCOUNTING201
DATE: JULY2025
DURATION: 3 HOURS
PAPER: THEORYAND CALCULATIONS
MARKS: 100
EXAMINER(S)
SECOND OPPORTUNITY EXAMINATION PAPER
Mr. C. Mahindi, Ms. P.Erkie, Mr. F.Alumbungu, Ms. O.Ndivayele, Ms. A Gustav
and Dr. D.R. Muzira
MODERATOR: Dr. S. Dzomira
INSTRUCTIONS
1. Capture your full name, student number and assessment number on the first page.
2. Answer ALL the questions and manage your time properly.
3. Number each page correctly
4. Write clearly and neatly.
5. Do not write in pencil and do not use tip-ex, as this will not be marked.
6. The names of people and businesses used throughout this assessment do not reflect the
reality and may be purely coincidental.
7. SHOW ALL WORKINGS!
THIS QUESTION PAPER CONSISTS OF 3 PAGES (excluding this front page)
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QUESTION 1
(40 Marks)
Browley Limited is a fishing company based in Walvis Bay. The following information relates
to the financial period ended 28 February 2024.
Fishing vessel
During the year ended 28 February 2024, Browley commissioned a vessel to be constructed
by one of its subsidiary companies for use as a fishing vessel.
Included in the cost of construction are the following costs:
• N$712,000 for inventory (wood, nails etc) used to build the vessel, including an
amount of N$14,000 for inventory that had to be scrapped as a result of wastage.
• N$106,500 in direct labour costs, of which N$6,000 was in respect of idle time.
• N$95,000 allocated to overheads, half of which are administrative overheads.
• N$35,000 spent on staff training costs on all aspects of running the vessel including
navigation and safety protocols.
In addition to the above costs, an engine was fitted to power the fishing vessel at a cost of
N$500,000. The engine was identified as a separate component with a useful life of 5 years.
The construction of the fishing vessel was completed on 1 September 2023 on which date it
was available for use. The vessel was brought into use on 1 October 2023.
The estimated useful life of the vessel is 10 years with economic benefits deemed to accrue
to the entity evenly over the useful life of the fishing vessel.
Machinery
In addition to the fishing vessel, Browley has a factory with machinery to sort fish caught into
different sizes.
The following information was extracted from the trial balance of Browley Limited on 1 March
2023:
Machinery
Accumulated dep: Machinery
N$
3,000,000
1,600,000
On 1 December 2023, Browley exchanged one of its old sorting machines for a newer sorting
machine. The carrying amount of the old sorting machine on 1 March 2023 was N$480,000
(Cost N$800,000). Browley believed that the old sorting machine it could be sold for
N$550,000 on 1 December 2023 although this amount estimate could not be reliably verified.
The fair value of the new machine was N$625,000.
Depreciation is calculated on all machinery using the straight-line method over a period of 5
years.
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REQUIRED:
a) Calculate the cost of the fishing vessel (excluding the engine) to be capitalised and
specify the date on which the capitalisation occurs.
(7)
b) Calculate the depreciation on the fishing vessel (including the engine) for the reporting
period ended 28 February 2024.
(5)
c) Provide all the general journal entries to account for the machinery for the year
reporting period ended 28 February 2024. Provide a justification for the figure used
for the value of the new sorting machine. (Journal narrations are not needed). (12)
d) Prepare the property, plant and equipment reconciliation note of Browley Limited for
the reporting period ended 28 February 2024 in terms of IAS 16 - Property, Plant and
Equipment.
(16)
QUESTION 2
(25 marks)
FabriCo Namibia is a company that produces fabric for clothing manufacturers across Namibia.
The company has a 31 December year-end. The following information relates to one of its
assets:
Land - Windhoek
On 01 September 2022, the company purchased a plot of land in Windhoek for N$4,500,000.
According to management, the land was acquired with the intention of holding it for capital
appreciation. The land was available for use as intended by management on the date of
acquisition.
On 31 December 2022, the land was revalued for the first time. On this date, the fair value of
the land was determined to be N$4,650,000. A second revaluation was performed on 31
December 2023. On this date, the fair value of the land was determined to be N$4,800,000.
On 31 October 2024, following a strategic review of its asset portfolio, FabriCo Namibia
initiated steps to dispose of the land and all criteria for classification of land as a 'held for sale'
asset were met on the same day. A binding agreement to sell the land was entered into at that
time for N$4,200,000, and the sale was finalized shortly thereafter on 05 November 2024.
It is FabriCo's policy to account for Investment Property using the fair value model.
REQUIRED:
a) With reference to the relevant definitions and guidance in IAS 16: Property, Plant and
Equipment, IAS40: Investment Property, and IFRS5: Non-current Assets Held for Sale,
assess how the land should be classified throughout the entire lifetime of the asset in
the financial statements of FabriCo Namibia. Clearly indicate the appropriate
classification and measurement at each relevant date and provide justification for your
answer based on the applicable accounting standards.
(10)
b) Prepare the relevant journal entries from the date of acquisition of the land up to the
completion of the sale.
(15)
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QUESTION 3
(35 marks)
Nam Dairies is a company operating in the agricultural and dairy industry in Namibia. It has a
30 June year end. Nam Dairies owns a brand named Daisy Cow. The following information
relates to the Daisy Cow Brand:
Purchase date:
Cost Price:
Legal rights granted:
Further renewal cost:
1July 2023
N$850,000
25 years, renewable for a further 5 years
N$1, 700,000
At the time of the purchase of the Brand, it was estimated that Daisy Cow would render profits
of N$136,000 per annum and at that time it appeared so successful that its useful life
appeared to be indefinite.
Management is becoming increasingly concerned, however, as a review of the past financial
statements revealed declining profits from the Daisy Cow brand. The budgeted profits in June
2024 indicated a slight (immaterial dip) in future expected profits, but taken together with the
latest budgeted profits presented at a directors meeting on 30 June 2025, it seems clear that
the annual profits are on a downward spiral.
The latest budgeted figures reveal the following estimates:
Present value of net cashflows:
Expected proceeds on sale
Selling cost
N$340,000
N$374,000
N$3,400
REQUIRED:
a) Discuss whether the Daisy Cow Brand should be amortised given the fact that at the
time of purchase it appeared that the useful life was indefinite. Your discussion should
include a discussion on the useful life of the brand.
(10)
b) What factors would indicate that an asset may be impaired.
(5)
c) Calculate the carrying amount and any impairment loss of the Daisy Cow brand on 30
June 2025, assuming that it is amortised over a period of 25 years and provide the
general journal entries for the reporting period ended 30 June 2025.
(10)
d) Prepare the Intangible Asset reconciliation note of Nam Daires for the reporting period
ended 30 June 2025.
(10)
END OF EXAMINATION QUESTION PAPER
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