Ngcobo Ltd elected to apply the recognition exemption in respect of low value assets to this lease
Question:
Ngcobo Ltd elected to apply the recognition exemption in respect of low value assets to this
lease agreement (IFRS 16.5). Ngcobo Ltd accounts for the lease and non-lease components
separately (IFRS 16.12).
4. The long-term loan was obtained on 1 January 2019 from HL Bank and the capital portion is
repayable in seven equal annual instalments starting 31 August 2019. Interest on the loan is
calculated at 10% per annum and is payable at the end of each financial year.
5. Other operating income consists of:
Dividends received from the following companies:
- Eysele Ltd ..........................................................................................
- Maraisane Ltd ....................................................................................
Interest received from Maraisane Ltd..........................................................
R
10 000
6 000
3 000
19 000
6. Investments:
6.1 The issued ordinary share capital of Maraisane Ltd is R40 000 (shares issued at R1 each).
Ngcobo Ltd owns 21 000 shares in Maraisane Ltd.
6.2 Ngcobo Ltd owns 50 000 of the 1 200 000 issued shares in Eysele Ltd purchased for R100 000.
The shares of Eysele Ltd are traded on the JSE Limited and the market value per share was
R3,00 each on 29 February 2020. The market value on 28 February 2021 was R4,00 per share
and no adjustments have yet been made during this year regarding the increased market value.
These shares are obtained for speculative purposes.
7. The non-current assets are depreciated at the following rates and methods:
Motor vehicles - 20% per annum using the reducing balance method
Equipment - 20% per annum using the straight-line method
One of the motor vehicles with a carrying amount of R40 000 on 29 February 2020 was sold on
31 August 2020. Only the proceeds have been recorded so far.
All the equipment was purchased on 1 March 2018 and no sales or purchases of equipment
have occurred since then.
(a) Prepare the statement of profit or loss and other comprehensive income of Ngcobo Ltd for the financial year ended 28 February 2021. Your answer must comply with the
requirements of International Financial Reporting Standards (IFRS).
(b) Prepare the note “profit before tax” that should accompany the statement of profit or loss and other comprehensive income of Ngcobo Ltd for the financial year ended
28 February 2021. Your answer must comply with the requirements of International
Financial Reporting Standards (IFRS).
Accounting For Cambridge International AS And A Level
ISBN: 9780198399711
1st Edition
Authors: Jacqueline Halls Bryan, Peter Hailstone