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FAC611S-FINANCIAL ACCOUNTING 201-1ST OPP- JUNE 2025 |
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nAmI BIA unIVERSITY
OF SCIEn CE Ano TECHn OLOGY
FACULTYOF 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: JUNE 2025
DURATION: 3 HOURS
PAPER: THEORYAND CALCULATIONS
MARKS: 100
EXAMINER(S)
MODERATOR:
FIRST OPPORTUNITY EXAMINATION PAPER
Mr. C. Mahindi, Ms. P.Erkie, Mr. F.Alumbungu, Ms. O.Ndivayele, Ms. A Gustav
and Dr. D.R. Muzira
--
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
(30 marks)
EduTab is a company that produces educational tablets for school learners across Namibia.
The company has a 31 March year-end.
The following information relates to the assets of the company:
Property- Swakopmund
On 01 October 2021, the company purchased a manufacturing property for N$8 000 000
(Land: N$2 300 000; Building: N$5 700 000). The residual value of the building on acquisition
date was estimated to be N$700 000. The property was available for use, as intended by
management, on the acquisition date. The building is expected to have a useful life of 20 years.
Both the residual value and useful life of the building remained unchanged throughout the
period.
On 31 March 2024, the land was revalued for the first time. On this date, the fair value of the
land was determined to be N$2 400 000. Additionally on the same date, due to a decline in
the market and changes in the company's operational plans, a review was conducted. It was
determined that the fair value less costs to sell was N$4 980 000, and the value in use was
N$4 700 000.
On 31 March 2025. The fair value of the land was N$ 2 200 000.
REQUIRED:
a) Prepare journal entries for the year ended 31 March 2024 and 31 March 2025. Show
account classifications (SPL,SFP,OCI etc).
(20)
b) Disclose the Property, plant and equipment in the notes to the financial statements for
the year ended 31 March 2025.
(10)
QUESTION 2
(30 marks)
Leen Ltd acquired a property on 1 January 2019 at a cost of N$4,000,000 and immediately
occupied it as office premise. On acquisition, it was estimated to have a useful life of 50 years.
Subsequent to its acquisition, the asset was measured at depreciated cost until 1 October
2024 when management of Leen Ltd decided to convert the building into an investment
property (mainly for rentals) and rented it out to tenants in terms of an operating lease
agreement.
Following this decision, the property was fair valued at N$3,800,000. Leen Ltd adopted the
fair value model for subsequent measurement of the investment property. On 31 December
2024, it was fair valued at N$3,900,000.
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REQUIRED:
a) Provide the general journal entries to account for the property in the records of Leen
Ltd for the reporting period ended 31 December 2024. (Show account classifications
SPL, SFP,OCI etc). Clearly indicate whether the buildings are classified as property,
plant and equipment (PPE)or investment property (IP).
(15)
b) Account for the treatment of this property in the 2024 financial statements (SPL,SFP,
SCE)of Leen Ltd.
(7)
c) A bookkeeper heard that you are an accounting student and came with an enquiry on
how to deal with a change in use of an Investment Property to Inventory and a change
from Inventory to Investment Property. Describe how to deal with these changes in
use.
(8)
Show all workings!
QUESTION 3
(40 marks)
You are the financial accountant at Boma Technologies Ltd, a Namibian company that develops
and licenses specialised software to clients in the mining industry. The company's financial
year ends on 31 May.
On 1 June 2023, Boma Technologies Ltd capitalised N$2 000 000 in development costs related
to a new software product for mine safety inspections. The recognition criteria of IAS 38 -
Intangible Assets were met. The useful life of the software was estimated at 5 years, with no
residual value, and amortisation is calculated on a straight-line basis
At the end of the 2024 financial year (31 May 2024), due to a competitor's release of a similar
product, management conducted an impairment test. The value in use was estimated to be
N$1, 235,000 while the fair value less costs to sell were estimated at N$1 300 000.
On 31 January 2025, management decided to sell the software, intending to focus on a new
product line. On that date:
• The software met the criteria for classification as a non-current asset held for sale
(NCAHFS)under IFRS5.
• The fair value less costs to sell was N$1 000 000.
By 31 May 2025, the planned sale had not occurred, and the board resolved to retain the asset
for continued use due to renewed client interest.
The recoverable amount at 31 May 2025 was estimated to be N$1 500 000.
REQUIRED
a) What are the criteria to be considered to classify an asset as held for sale.
(5)
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b) Calculate the carrying amount of the Software before classification as held for sale for
the reporting period ended 31 May 2025.
(5)
c) Provide the general journal entries on 31 January 2025.
(5)
d) Calculate the impairment loss/ impairment loss reversal on 31 May 2025 and explain
the treatment of the asset on this date and going forward.
{10)
e) Prepare the Intangible asset note to the financial statements of Barna Technologies
limited for the reporting period ended 31 May 2025
{15)
END OF EXAMINATION QUESTIONPAPER
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