In order to assist Ingiphile in the preparation of the 2021 financial statements, you are required...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
In order to assist Ingiphile in the preparation of the 2021 financial statements, you are required to read the case study provided and answer the questions. Tsangoni CC is a company which manufactures, sells and services mountain bikes in Cape Town, South Africa. The financial director of the company, Ingiphile, is struggling with the preparation of the financial statements for the year ended 31 August 2021 and has asked for your assistance. Bicycle frames: Tsangoni CC imports the majority of its bicycles and the parts required for maintenance from Europe. On 1 February 2021, an order for the shipment of bicycle frames was placed by Ingiphile. The terms of the order were as follows: Date of order 1/2/2021 Supplier Sensa Bicycles Ltd (Netherlands) Customer Tsangoni CC Product 10 "Sensa Romagna" frames Shipping date 1/3/2021 Price R5 000 per frame Payment terms Full payment to be made on 1/3/2022 Shipping terms FOB shipping point The shipment was made on 1 March 2021, and the inventory was received on 27 May 2021. A fair interest rate of 12% applies. Property. Plant and Equipment (PPE): PPE is comprised of two assets: a servicing machine and a delivery vehicle. Tsangoni CC purchased the servicing machine for the servicing of bicycles for R110 000 on 1 September 2019. Ingiphile felt that the consumption of future economic benefits would be best represented by the number of bicycles it serviced, which was estimated to be 750 bicycles. The servicing machine serviced 34 bicycles from 1 September 2019 to 31 August 2020 (the previous financial year) and 43 bicycles from 1 September 2020 to 31 August 2021 (the current financial year). The machine could be sold at the end of its useful life for R4 000. Tsangoni CC purchased the delivery vehicle for R120 000 on 1 October 2020. Ingiphile estimated the useful life to be 5 years. The vehicle can be sold at the end of its useful life for R12 000 if costs of R2 000 are incurred to have it serviced. Discuss when and at what amount the bicycle frames should be initially recorded in the financial (10 marks) statements of Tsangoni CC. You should apply the relevant definition and recognition criteria as per the Conceptual Framework in your discussion. 1.1 Prepare all the general joumal entries relating to the purchase of bicycle frames for the year ended (10 marks) 31 August 2021. 1.2 1.3 Calculate the opening balance of the accumulated depreciation: PPE: servicing machine account (balance at 1 September 2020) and the total depreciation expense. (8 marks) 1.4 (2 marks) Assume that at the end of the year, Ingiphile found that the delivery vehicle had a value in use of R84 000 and could be sold for R87 000 if R8 000 was incurred to prepare it for sale. At what amount would PPE: delivery vehicle be shown on the statement of financial position as at 31 August 20217 In order to assist Ingiphile in the preparation of the 2021 financial statements, you are required to read the case study provided and answer the questions. Tsangoni CC is a company which manufactures, sells and services mountain bikes in Cape Town, South Africa. The financial director of the company, Ingiphile, is struggling with the preparation of the financial statements for the year ended 31 August 2021 and has asked for your assistance. Bicycle frames: Tsangoni CC imports the majority of its bicycles and the parts required for maintenance from Europe. On 1 February 2021, an order for the shipment of bicycle frames was placed by Ingiphile. The terms of the order were as follows: Date of order 1/2/2021 Supplier Sensa Bicycles Ltd (Netherlands) Customer Tsangoni CC Product 10 "Sensa Romagna" frames Shipping date 1/3/2021 Price R5 000 per frame Payment terms Full payment to be made on 1/3/2022 Shipping terms FOB shipping point The shipment was made on 1 March 2021, and the inventory was received on 27 May 2021. A fair interest rate of 12% applies. Property. Plant and Equipment (PPE): PPE is comprised of two assets: a servicing machine and a delivery vehicle. Tsangoni CC purchased the servicing machine for the servicing of bicycles for R110 000 on 1 September 2019. Ingiphile felt that the consumption of future economic benefits would be best represented by the number of bicycles it serviced, which was estimated to be 750 bicycles. The servicing machine serviced 34 bicycles from 1 September 2019 to 31 August 2020 (the previous financial year) and 43 bicycles from 1 September 2020 to 31 August 2021 (the current financial year). The machine could be sold at the end of its useful life for R4 000. Tsangoni CC purchased the delivery vehicle for R120 000 on 1 October 2020. Ingiphile estimated the useful life to be 5 years. The vehicle can be sold at the end of its useful life for R12 000 if costs of R2 000 are incurred to have it serviced. Discuss when and at what amount the bicycle frames should be initially recorded in the financial (10 marks) statements of Tsangoni CC. You should apply the relevant definition and recognition criteria as per the Conceptual Framework in your discussion. 1.1 Prepare all the general joumal entries relating to the purchase of bicycle frames for the year ended (10 marks) 31 August 2021. 1.2 1.3 Calculate the opening balance of the accumulated depreciation: PPE: servicing machine account (balance at 1 September 2020) and the total depreciation expense. (8 marks) 1.4 (2 marks) Assume that at the end of the year, Ingiphile found that the delivery vehicle had a value in use of R84 000 and could be sold for R87 000 if R8 000 was incurred to prepare it for sale. At what amount would PPE: delivery vehicle be shown on the statement of financial position as at 31 August 20217
Expert Answer:
Answer rating: 100% (QA)
11 The bicycle frames should be initially recorded in the financial statements of Tsangoni CC on 1 M... View the full answer
Related Book For
Posted Date:
Students also viewed these accounting questions
-
Tsangoni CC is a company which manufactures, sells and services mountain bikes in Cape Town, South Africa. The financial director of the company, Ingiphile, is struggling with the preparation of the...
-
In order to assist Ingiphile in the preparation of the 2021 financial statements, you are required to read the case study provided and answer the questions. Isangoni CC is a company which...
-
The following information is available for the year ended 31 March 20X6 (values in $m): Present value of scheme liabilities at 1 April 20X5 $1,007; Fair value of plan assets at 1 April 20X5 $844;...
-
Design a plan to research and select a new or used automobile.
-
Hasson Services trial balance at the end of July 2014 follows. It does not balance because of a number of errors. Hassons accountant compared the amounts in the trial balance with the ledger,...
-
Define globalization. How does denationalization differ from internationalization?
-
Clair, Inc., earned \(\$ 4.50\) per share of common stock in the current year and paid dividends of \(\$ 2.34\) per share. The most recent market price per share of the common stock is \(\$ 46.80\)....
-
Refer to the financial statements and other data in Problem 16-11. Assume that you have just inherited several hundred shares of Modern Building Supply stock. Not being acquainted with the company,...
-
What limitations are there on the use of statistical methods to assist in the risk quantification process?
-
The Crazy Eddie fraud may appear smaller and gentler than the massive billion-dollar frauds exposed in recent times, such as Bernie Madoffs Ponzi scheme, frauds in the subprime mortgage market, the...
-
You have a monthly budget of $1500. You spend $500 on rent, $300 on food, and $200 on transportation. How much money do you have left for other expenses?
-
A year ago in Oslo Airport I checked in to an SAS flight. One airline kiosk issued a boarding pass, another punched out a luggage tag, then a computer screen showed me how to attach it and another...
-
1.A vial of isophane insulin for subcutaneous injection contains100 units/ml. How many units are there in a 0.7 ml dose? 2.The initial adult dose of metformin, an antihyperglycemicdrug, is 1000...
-
Claire purchased 200 common shares of Clairco Ltd. in 2015 for $100. It is now 2017 and Claire would like to step down from running the company full time and let her child, Junior, take over....
-
In its first tax year, the Vasquez Estate generated $50,000 of taxable interest income and $30,000 of tax-exempt interest income. It paid $8,000 in fees to the executor. The estate is subject to a...
-
What is the present value of a stream of 5 end-of-year annual cash receipts of $3,200 given a discount rate of 13%? (Round your final answers to 2 decimal places.) a. Use the appropriate table...
-
Task 3 - class named Instrument -Give it a -constructor -all with default values -2 public properties -1 private property -a toString method Task 4 new Instrument object. Output the two public...
-
6 (a) Briefly develop a mathematical model of the behaviour of a copper-twisted pair cable (b) Derive the magnetic energy from: w given that: K + w, where the - - k symbols have their usual meaning...
-
Refer to Oriental Express in E7-45B. Since franchising Oriental Express, the restaurant has not been very successful due to Noodles Unlimited coming on the scene as a competitor. To increase its...
-
Munyon Music is considering investing $675,000 in private lesson studios that will have no residual value. The studios are expected to result in annual net cash inflows of $100,000 per year for the...
-
Consider SnowCastles from S8-3. Assume that SnowCastles' reputation has diminished and other resorts in the vicinity are charging only $60 per lift ticket. SnowCastles has become a price-taker and...
-
Match the internal control function from the left-hand column with the area of responsibility in the ta dedshetak utnisgsee! right-hand column: 1. Prepares deposit receipt. a Retail sales supervisor...
-
Identify the element of the fraud triangle associated with each of the following statements: 1. "I take full responsibility for what happened. But saying that, I know in my mind that I did nothing...
-
Match the activities from column 1 with the activities described in column 2. 1 a. Manage accounts receivable b. Manage inventory levels c. Manage accounts payable d. Invest excess cash 2 1. Acquire...
Study smarter with the SolutionInn App