QUESTION 2 ( 5 5 2 ( 5 5 marks ) ) Fair Screen ( ( Pty ) ) Ltd ( ( Fair

 QUESTION $2(55$ marks$)$ 

 

Fair Screen $($Pty$)$ Ltd $($Fair Screen$)$ manufactures small components used in the

manufacture of computer screens. Fair Screen has a $31$ October financial year$-$end.

You are provided with the Statement of Financial Position as well as extracts from the

Statement of Profit or Loss and Other Comprehensive Income of Fair Screen $($Pty$)$ Ltd for

the financial year ended $31$ October $2024.$

Statement of Financial Position of Fair Screen $($Pty$)$ Ltd as at $31$ October $2024$

$20242023$

R R

ASSETS

Machinery $195000120000$

Land $590000500000$

Investments $-$ Shares $12000045000$

Non$-$current assets $905000665000$

Inventory $2850034500$

Trade receivables $12300062000$

Cash and cash equivalents $28181074000$

Current assets $433310170500$

Total assets $1338310835500$

EQUITY AND LIABILITIES

Equity attributable to owners $850280533750$

Share capital $250000150000$

Revaluation reserve: Land $900000$

Retained earnings $510280383750$

Total equity $850280533750$

ANNEXURE I: FORMATIVE ASSESSMENT $2$

$98$ HFAC$132-1-$Jul$-$Dec$2024-$FA$2-$EDK$-$V$3-20240719$

Long$-$term loan: $11\mathrm{.}25\%$ p$.$a$.300000150000$

Non$-$current liabilities $300000150000$

Trade payables $145250121500$

Dividends payable $2700010000$

SARS $($income tax payable$)1578020250$

Current Liabilities $188030151750$

Total liabilities $488030301750$

Total equity and liabilities $1338310835500$

Extract from the Statement of Profit or Loss and Other Comprehensive

Income of Fair Screen $($Pty$)$ Ltd for the year ended $31$ October $2024$

R

Profit before tax $233260$

Income tax expense $(62980)$

Profit for the year $170280$

All information below has already been correctly accounted for:

Note $1$: Machinery

During the current financial year, the following transactions occurred which affected

Machinery:

New machinery to the value of R$155000$ was purchased in cash to replace

the old, outdated machine.

The old machine was sold for cash. At the time of sale, the carrying value

of the old machine amounted to R$50000,$ and an accounting loss on sale

of R$14000$ was incurred.

There were no other additions, disposals or impairments to machinery items that occurred

during the financial year.

ANNEXURE I: FORMATIVE

Note $2$: Land

Land was revalued for the first time by an independent valuator.

There were no additions, disposals or impairments to Land items that occurred during the

financial year.

Note $3$: Loan

On $1$ July $2024,$ the long$-$term loan was increased due to the rapid growth of the company.

Note $4$: Finance Cost

The following finance cost transactions occurred during the year which all were paid in

cash:

Interest on loan.

Interest on trade payables for the year totalled R$122.$

Note $5$: Share Investment

During the $2024$ financial year, Fair Screen purchased additional share investments at a

cost of R$85000.$ Certain investments were also sold during the current financial year

which resulted in a profit of R$1500$ on the sale. Fair Screen received dividends from these

investments of R$13200$ for the year. All transactions relating to investments including the

receipt of dividends, were done in cash.

Note $6$: Trade receivables

During the year, R$8900$ worth of trade receivables were written off as irrecoverable.

Note $7$: Dividends

At year$-$end, Fair Screen decided to declare dividends of R$1\mathrm{.}75$ per share. At the time of

the divided declaration, there were $25000$ issued shares.

ANNEXURE I: FORMATIVE ASSESSMENT $2$

$100$ HFAC$132-1-$Jul$-$Dec$2024-$FA$2-$EDK$-$V$3-20240719$

REQUIRED:

Prepare the Statement of Cash Flows of Fair Screen $($Pty$)$ Ltd for the financial year ended

$31$ October $2024,$ using the indirect method.

Ignore VAT and dividends tax.

Show all workings, and reference accordingly.

Always round up to the nearest rand where applicable.

$(55$ marks$)$