QUESTION 1 Mr Moloi has been Kotane Technologies manager for nearly twenty years. Mr Moloi had extensive knowledge of Kotane Technologies's Computer coding as well as its customer base. On 31 December 2020, Mr Moloi decided to go on early retirement. Due to the extensive 'in house' knowledge Mr Moloi has regarding Kotane Technologies's operations, Mr Moloi agreed to sign an agreement in which he is legally not allowed to work in any capacity within the Information Technology sector in South Africa until 31 December 2025 (a restraint of trade agreement). In terms of the agreement a lump sum of R5 500 000 was mutually agreed between both parties and was paid to Mr Moloi on 31 December 2020. Kotane Technologies received confirmation from SARS that the restraint of trade payment made to Mr Moloi is deductible for tax purposes in full when actually paid. Ignore Tax implications Required: You are a Financial Manager of Kotane Technologies, the financial director correctly believes the payment of R5,5 million to Mr Moloi is an asset. Prepare a memorandum to the financial director in which you address the following matters relating to the transaction: i) the classification, initial recognition and measurement (7 marks) ii) Presentation (1 mark) QUESTION 1 Mr Moloi has been Kotane Technologies manager for nearly twenty years. Mr Moloi had extensive knowledge of Kotane Technologies's Computer coding as well as its customer base. On 31 December 2020, Mr Moloi decided to go on early retirement. Due to the extensive 'in house' knowledge Mr Moloi has regarding Kotane Technologies's operations, Mr Moloi agreed to sign an agreement in which he is legally not allowed to work in any capacity within the Information Technology sector in South Africa until 31 December 2025 (a restraint of trade agreement). In terms of the agreement a lump sum of R5 500 000 was mutually agreed between both parties and was paid to Mr Moloi on 31 December 2020. Kotane Technologies received confirmation from SARS that the restraint of trade payment made to Mr Moloi is deductible for tax purposes in full when actually paid. Ignore Tax implications Required: You are a Financial Manager of Kotane Technologies, the financial director correctly believes the payment of R5,5 million to Mr Moloi is an asset. Prepare a memorandum to the financial director in which you address the following matters relating to the transaction: i) the classification, initial recognition and measurement (7 marks) ii) Presentation (1 mark)