QUESTION $2(35$ marks$)(63$ minutes$)$

The following list of balances, is an extract from the trial balance of Zama Ltd on $31$ December $2022$:

$R$

Debit $/$

$($Credit$)$

Land at cost $(1$ January $2022)...............................................................................5075000$

Buildings at cost $(1$ January $2022)..................................................................................6720000$

Machinery at cost $.......................................................................................................5127500$

Motor vehicles at cost $.............................................................................................2275000$

Accumulated depreciation.

Motor vehicles

$(819000)$

Additional information

Land and buildings:

$1\mathrm{.}1$ Existing buildings, as at the beginning of the current financial year are owner$-$occupied and used as the company's administration offices, but the entity has not yet determined that it will use the land as owner$-$occupied property. The cost of the land, stand $305$ Msanzi, and the buildings was R$5075000$ and R$6720000$ respectively. This land and buildings were originally purchased on $1$ September $2019.$ The fair value of the land on $1$ January $2022$ was $10\%$ above the carrying amount on that date.

$1\mathrm{.}2$ New land was purchased for R$3150000$ on $2$ January $2022,$ on which a factory building was constructed during the current year. The construction costs amounted to R$6930000.$ Machinery with a cost of R$1960000$ and a residual value of R$210000,$ was withdrawn from production from $2$ January $2022$ until $30$ September $2022$ to be used in the construction of the building. The building was ready for use on $1$ October $2022.$

$1\mathrm{.}3$ On $31$ December $2022,$ the financial year end of Zama Ltd$,$ the fair value of the property was as follows:

Origina

$R$

All of the net replacement values and fair values were determined by Mr Dube an independent sworn appraiser.

$1\mathrm{.}4$ Zama Ltd applies IAS$40$ Investment property on its investment property according to the fair value model.

Machinery with a cost of R$1715000$ was disposed of at its carrying value on $1$ August $2022.$ The company purchased all its machinery on $1$ December $2019.$

On $1$ July $2022$ a motor vehicle with a cost of $R770000$ was purchased to replace a motor vehicle that was disposed of in the previous financial year.

$9$

FAC$2601/$Ass$04/1/2024$

QUESTION $2($continued$)$

The following rates of depreciation are applicable:

Buildings $5\%$ straight$-$line method

Vehicles $20\%$ reducing balance method

Machinery $20\%$ straight$-$line method

No other transactions regarding non$-$current assets took place during the year.

REQUIRED:

$($a$)$ Prepare the Property, plant and equipment note of Zama Ltd for the financial year ended $31$ December $2022.$ Your answer should comply with the requirements of International Financial Reporting Standards $($IFRS$).$

Marks

$32$

$($b$)$ Prepare the note on Investment property of Zama Ltd for the financial year ended $31$ December $2022.$ Your answer should comply with the requirements of International Financial Reporting Standards $($IFRS$).$

Please note:

The total column of Property, plant and equipment is not required.

You may ignore the accounting policy note disclosure

Comparative figures are not required.

Show all calculations.

Round up to the nearest Rand.