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GFA711S- FINANCIAL ACCOUNTING 310- 1ST OPP- JUNE 2025 |
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nAmlBIA unlVERSITY
OF SCIEnCE Ano TECHnOLOGY
FACULTY OF COMMERCE, HUMAN SCIENCES AND EDUCATION
DEPARTMENT OF ACCOUNTING, ECONOMICS AND FINANCE
QUALIFICATION: BACHELOR OF ACCOUNTING
QUALIFICATION CODE: 07 BOAC LEVEL: 7
COURSE CODE: GFA711S
COURSE NAME: FINANCIAL ACCOUNTING 310
DATE: June 2025
DURATION: 3 HOURS
PAPER:THEORYAND CALCULATIONS
MARKS: 100
FIRST OPPORTUNITY EXAM
EXAMINER{S) Dr. S. Dzomira; Dr. M. Nyakuwanika; Ms. A. Peter
MODERATOR: Mr Marko Tondotsa
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. SHOWALLWORKINGS!
THIS QUESTION PAPER CONSISTS OF 4 PAGES (excluding this front page)
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QUESTION 1 (20 marks)
Jay-Jay Jet Limited is a low-cost airline. Leave accruing to its employees during any
given year may be carried forward for one year only and is non-vesting. Details
regarding the leave offered to each of the company's three categories of employees,
pilots, aircrew and directors, are as follows:
Pilots
Aircrew
Directors
Days leave
allocated in
2024 per
employee
45 days
25 days
15 days
Average days
actually taken
in 2024 (from
the 2024
allocation) per
employee
Average
unused days
at 31/12/24
per employee
35 days
18 days
10 days
10 days
7 days
5 days
Average
unused days
at 31/12/24
that are
expected to be
taken in 2025
per employee
4 days
3 days
2 days
Details regarding the number of employees under each of the company's three
categories of employees, together with their average annual salaries, are as follows:
Pilots
Aircrew
Directors
Number
employees
2024
200
300
10
of
during
Number
of
employees
expected to resiqn
20
6
1
Average annual
salary during 2024
(N$)
175 000
90 000
600 000
There were no resignations or newly appointed employees during 2024. It is probable
that the employees who the company expects will resign, will resign very early in 2025
and thus it is estimated that none of these will be taking any leave in 2025. Thus, the
average number of days leave that will be taken in 2025 (referred to above) has been
calculated based on only those employees who are expected to remain employed in
2025.
Jay-Jay Jet Limited operates on a 5-day working week. The year ended 31 December
2024 has 365 days.
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The leave pay liability had a balance of N$200 000 at 31 December 2023.
Required:
a) Determine the leave-pay liability that would need to be recognised for each type of
employee. (7 marks)
b) Journalise the entries that would be necessary to account for paid leave for the year
ended 31 December 2024 (5 marks)
c) Identify the four categories of employee benefits per IAS 19 Employee Benefits and
explain the meaning of each. (8 marks)
QUESTION 2 (25 marks)
The following is an extract from the trial balance of Glitch Limited at 31 December
2024, together with some additional information:
Glitch Limited
Extract From Trial Balance
at 31 December
Retained earnings at beginning of
year
Profit for the year
Preference dividends declared
Ordinary dividend declared
2024
Dr (N$) Cr (N$)
94500
2500
5000
50000
2023
Dr
Cr (N$)
(N$)
60000
2500
3000
40000
Additional information
• The balances in the share capital accounts at 1 January 2023 were as follows:
- Ordinary shares: N$200 000 (all the ordinary shares were issued at N$0,20
per share).
- Non-cumulative, non-redeemable10% preference shares: N$50 000 (all the
preference shares were issued at N$1 per share).
• An issue of 500000 ordinary shares took place on 31 March 2024 at an issue
price of N$0,20 per share.
• There was no other movement in the equity accounts other than the movements
evident from the information provided above. There are no components of other
comprehensive income.
Required:
a) Prepare an extract from the statement of profit or loss of Glitch Limited for the year
ended 31 December 2024. (10 marks)
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b) Prepare extracts from the statement of changes in equity of Glitch Limited for the
year ended 31 December 2024. (5 marks)
c) Prepare the earnings per share and dividends per share notes for inclusion in the
notes to the financial statements of Glitch Limited for the year ended 31 December
2024. (10 marks)
Financial statements and notes must be in accordance with International Financial
Reporting Standards. Comparatives are required for(a) to (c).
QUESTION 3 (30 marks)
Shamah Ltd, a manufacturer, values inventories at the lower of cost and net realisable
value, with cost determined using the weighted average (WA) method.
The value of closing inventories at 31 December 2022, 2023 and 2024 was originally
computed as follows:
2022
2023
2024
$
315 000
175 000
330 000
During the year ended 31 December 2024, management decided that the cost that the
cost of inventories should rather be determined using the first-in-first-out (FIFO) basis
to better reflect the physical flow of inventories.
Closing inventories at 31 December 2022, 2023 and 2024 were calculated on the FIFO
basis as follows:
2022
2023
2024
$
430 000
195 000
450 000
Profit before tax, before adjusting for the change in policy, for the years ended 31
December 2022 to 31 December 2024 was as follows:
2022
2023
2024
$
700 000 (Fully taxable)
850 000 (Fully taxable)
1 01 0 000 (Fully taxable)
Assume a tax rate of 30%. NAmRA indicated that the new inventory cost method will
be considered only from the 2024 onwards (i.e. prior year assessments will not be
reopened).
Retained earnings on 1 January 2023 amounted to $1 455 000 and on 31 December
2023 to $1 950 000. The issued share capital consists of 1 000 000 ordinary shares
that were issued at $1 each. Assume that a dividend of $100 000 is paid annually.
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Required:
Disclose the above information in the statement of profit or loss and other
comprehensive income and statement of changes in equity of Shamah Ltd for the year
ended 31 December 2024. (30 marks)
QUESTION 4 (25 marks)
Smart Limited enters a contract with Property Limited for the lease of three floors of
an office building. The exact floors are specified in the contract and Property Limited
is not permitted to relocate tenants to other floors of the building.
The commencement date of the lease is July 2024 and the duration of the lease is for
five years with the option to extend for a further five years. Smart Limited is reasonably
certain to exercise the option to extend the lease.
The lease payments are N$50 000 per annum during the initial term and N$55 000
per annum during the optional term, all payable in advance.
Smart Limited incurred initial direct costs of N$20 000, comprising N$15 000 as
compensation to the tenant formerly occupying the three floors and N$5 000 as agents
commission. These are paid on 1 July 2024. Property Limited agrees to reimburse the
N$5 000 agents commission.
The interest rate implicit in the lease is not readably determinable. Smart Limited's
incremental borrowing rate is 5% per annum. The following present value table is
provided:
Present value annuity in advance of N$1 for years 1 to 5, discounted at 5%
Present value annuity in advance of N$1 for years 6 to 10, discounted at 5%
PV factor
4,5459
3,5619
Required:
a) Calculate the amount to record as the initial lease liability and the right of use
asset, explaining your answer. (15 marks)
b) Prepare the journal entries in the accounting records of Smart Limited for the
year ended 30 June 2025 and 30 June 2026. (10 marks)
Ignore tax.
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