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Assignment 1 and 2 AFE3692 2023

This document provides information and guidelines for distance learning students regarding their semester 2 assignments. It outlines the following key points: 1. Important dates for assessments and their due dates in September and October. Students must submit assignments on or before the listed due dates. 2. Instructions on how to access course materials and submit assignments online through the Moodle learning platform. It emphasizes submitting assignments before the 11:55PM deadline on the due date. 3. Guidance for students on studying independently using the provided materials, accessing online resources, and using discussion forums for collaboration. It stresses the importance of understanding assignment questions and presenting clear, well-argued submissions.

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Petrina
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0% found this document useful (1 vote)
283 views23 pages

Assignment 1 and 2 AFE3692 2023

This document provides information and guidelines for distance learning students regarding their semester 2 assignments. It outlines the following key points: 1. Important dates for assessments and their due dates in September and October. Students must submit assignments on or before the listed due dates. 2. Instructions on how to access course materials and submit assignments online through the Moodle learning platform. It emphasizes submitting assignments before the 11:55PM deadline on the due date. 3. Guidance for students on studying independently using the provided materials, accessing online resources, and using discussion forums for collaboration. It stresses the importance of understanding assignment questions and presenting clear, well-argued submissions.

Uploaded by

Petrina
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 23

FACULTY OF COMMERCE,

MANAGEMENT & LAW


DISTANCE MODE ASSIGNMENT
LETTER

Academic Year 2023


Semester (2)
[Financial Accounting 1B- AFE3692]

A MUST, TO READ THE ENTIRE


DOCUMENT

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FACULTY OF COMMERCE, MANAGEMENT AND LAW

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ACCOUNTING, ECONOMIC & MANAGEMENT


SCIENCES

ASSIGNMENT ADMINISTRATION
DISTANCE AND ONLINE COURSES – 2023
SEMESTER 2
MONTH DATES ACTIVITIES Schools

July 19 July Semester 2 Commences


August 21-25 August 2023 Compulsory Virtual Vacation School All Schools

FIRST ASSESSMENT:2nd SEMESTER MODULES


29 August Due date: 01st Assessment of 2nd Semester Modules Only School of Accounting, School of Business
30 Aug-1 Sept Grace Period for assessment submission/ completion Management, Governance & Economics
School of Law

MAKE-UP/ COMPENSATORY ASSESSMENT 1: 2nd SEMESTER MODULES


September
20 September Make-up assessment due date: 1st Assessment School of Accounting, School of Business
– Only applicable if you score 1-39% in Assignment 1. Management, Governance & Economics
Take note that a new assessment (test or assignment) is School of Law
to be submitted.

SECOND ASSESSMENT: 2nd SEMESTER MODULES


September
18 Sept Due date: 02nd Assessment of 2nd Semester Modules Only School of Accounting, School of Business
19-21 Sept Grace Period for assessment submission/ completion Management, Governance & Economics
School of Law

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MAKE-UP/ COMPENSATORY ASSESSMENT 2: 2nd SEMESTER MODULES

4 October Make-up assessment due date: 2nd Assessment School of Accounting, School of Business
October – Only applicable if you score 1-39% in Assignment 2. Management, Governance & Economics
Take note that a new assessment (test or assignment) is School of Law
to be submitted.
13 October Lectures end for First Semester
Release of CA marks
18 October Examination commences All Schools
12 January 2024 University reopens

For modules that will have online tests, all information shall be communicated well in advance. Kindly take note that some modules might
have 3 to 4 assessments. E.g.
2 assignments and 1 to 2 online tests. All necessary information will be shared timely.
Good luck!

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2023 Distance Mode Assignments


[ Financial Accounting 1B- AFE3692]
Dear Student,

Welcome to the University of Namibia. We are confident that your studies and hard work will be rewarded with
success. We kindly advise that you obtain all the relevant information and booklets available for distance students
from your Moodle platform (including the 2023 Student Information Letter, Online Assignment Submission
Guide and other documents). These documents will provide guidance on how to approach your studies and will
guide you through your study materials as well as providing useful administrative information in submitting
assignments.

1. Study materials
Your study guide is essentially your “teacher/lecturer”. However, in addition, you are required to visit the library to
consult prescribed books and recommended readings that are indicated in the study guide as well as browse the
Internet in general. You are also responsible to purchase any prescribed textbooks required for your respective
courses/modules. Furthermore, you are strongly advised to follow the guidelines in the Online Assignment
Submission Guide available on Moodle.

2. Collaborative Learning
Unam avails all your modules through Moodle, enabling you to interact with your fellow students online through
forum discussions and chats. You can use the same platform to engage with your lecturers and tutors regarding
academic support. Please take advantage of Moodle to avoid isolation and strengthen your interaction with
colleagues, ask for help, and share/receive resources to aid your learning process. See below how to access forum
discussions on Moodle:

Figure 1: Forums in courses

3. Submission of assignments
It is very important to complete and submit a clean, clear and well-argued assignment for marking. Make sure that
you have understood the questions in order to answer them correctly. It is your responsibility to make sure that
every page of the completed assignment is correctly numbered before submitting your assignment.
As from 2017, ALL assignments are submitted through the Moodle Learning Management System. This is
an online platform where you will access all your modules and related information such as course outlines, course
notes and other learning materials that your lecturer/tutor may choose to share with you. Moodle is accessible here:
http://elearning.unam.edu.na. You should complete and submit all assignments on or before the given due date in
the assignment letter if you wish to obtain your CA marks and qualify for examinations. UNAM always updates its
assignment covers on an annual and semester basis. Please ensure that you have used the latest assignment
cover. The latest assignment cover is availed on each course on Moodle.
A user guide is available on how to submit your assignment in each module on the Distance Education Common
Space and you can access it on the Online Support system. Pay close attention to the following key points listed at
the beginning of the guide on:

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3.1 How you would know when you have successfully submitted your assignment: that is
when the submission status shows “Submitted for grading”

Figure 2: Assignment submission status

MAKE SURE THE SYSTEM GIVES YOU A CONFIRMATION OF SUBMISSION by the submission
status shown as "Submitted for grading" when done. If that status is NOT displayed when done, IT
DOES NOT COUNT AS A SUBMISSION.

3.2 Errors to avoid when submitting your assignment (committing these errors may result in you
failing to submit your assignments and therefore potentially failing your course)

a. You are submitting on the correct Module/Course


b. You have selected and uploaded the correct Assignment document from your computer
c. You are submitting the correct Assignment number for the respective activity (i.e.
Assignment 1, 2, etc.)

3.3 How to check the assessment feedback when your assignment has been graded.

4. Due Dates
All assignment due dates for 2023 are published on second page of this assignment letter. With the shift from
manual to online assignment submission since 2017, due dates are automated and non-negotiable. This means
that you would be required to submit your assignments ON or BEFORE the due date set on your assignment
(before 11h55 PM). After the date has passed (i.e. 12h00AM of the next day) the assignment submission will be
disabled, and you would no longer be able to submit your assignment. Please note that assignment
submissions will be open long before the due dates.
Please note that your assignment due dates are on page 2 of this Tutorial Letter. Use this assignment due dates
to set up your calendar tool on your mobile phone or computer to set reminders for yourself and manage your time.
Another way to keep pace with due dates, is by regularly visiting your Timeline of each of your courses on Moodle
on the Course Overview. Also download the Moodle mobile app to access Moodle on your mobile phone or tablet

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and have access to notifications about due dates at your fingertips from Google Play Store for Android or Apple
App Store for IOS.
5. Submission of Assignments
Due to challenges with Internet connectivity and speed, large files may take too long to upload, which is a big risk
if you wait until the last minute to submit your assignments. You are therefore strongly advised NOT to wait until
the final hours of the due dates to submit your assignments to avoid disappointments. You are also advised to
ensure that you are in an area with good Internet connectivity when submitting your assignments. Timely
submission of all assignments on or before the given due date is crucial for the timely grading and processing of
your CA marks and determining admission to exams.
Take note that assignments should never be submitted directly by email or hard copy to individual tutors
or any other staff members of the University of Namibia.
6. Academic Support
One every Moodle course there is an embedded Academic Support section with materials to assist you with your
writing process (see Figure 3 below). Go through the videos in order to enhance your writing process and submit
better quality assignments.

Figure 3: Academic Support tutorials

7. Grace Period
A grace period refers to three (3) additional days added after your assignment due date. The
purpose of this grace period is to provide each student with time to verify and or to make
amendments to assignments already submitted. These changes may include correcting errors
like submitting a file to a wrong module or on a wrong assignment; submitting a wrong file; losing
internet connectivity, etc. An example would be that a student attempting to submit an
assignment and they lose internet connection would still be able to try again the day after at a
different place or when the connection has been restored.

8. Conditions under which late submissions will be granted/ accepted

Medical and death are the only reasons accepted for the late submission of assignments. Late
submission of assignments will only be approved 7 days (including public holidays and
weekends) after the due date of an assignment. Valid documentary proof must be attached
as part of the assignment before any late submission will be considered. Late submission
without valid documentary proof attached to the assignment will be returned unmarked

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and may not be resubmitted for marking. Travelling and attendance of workshops, job
related activities and conferences may not be used as an excuse for the late submission
of assignments.

Sick leave certificates should be submitted within 7 days from the time you happened to be
booked off. For example, if you become sick and booked off on the day you visit the doctor,
then the medical certificate should be submitted via the online ticketing system to the
respective Distance Education Officer within 7 days (including weekends and public holidays).
Any medical certificate submitted after 7 days cannot be entertained. Any medical certificate
dated during the grace period will not be considered. The grace period is not regarded as
an assignment submission due date, but rather additional days provided to each student to
submit or amend already submitted assignment (s).

Medical certificates submitted after the end date of the sick leave cannot be entertained.

9. Plagiarism Control
It has been observed that some students copy information from the Internet and paste into their
assignments without acknowledging the sources of the information. This is called plagiarism. A
copy of the Policy on Academic Integrity has been provided to you on every course on Moodle.
Please note that plagiarism which includes copying and pasting information from the Internet
would not be tolerated, shall result in your assignments declared null and void and graded as a
“0”. All assignments submitted through Moodle would be checked for plagiarism using plagiarism
detection software. You are therefore strongly urged to acknowledge EVERY source that you
use for your assignment by using the appropriate citations and references following the
referencing style prescribed by your lecturers (APA Referencing guides are available freely
online). Find one here: http://www.uofa.edu/docs/apa-documentation.pdf

Any assignment found with high similarity scores or with evidence of clear attempts to cheat
such as submitting an assignment that is not your own would result in a zero (0) grade.

10. Vacation schools


Attending vacation school is COMPULSORY and the vacation school timetable will be made available
through the UNAM Moodle, on the Distance Education Common Space.

11. My UNAM Portal and Moodle


We recommend that you regularly (at least twice a week) access your “My UNAM Portal”
(http://my.unam.edu.na) for your registration status and information, and Moodle
(https://elearning.unam.edu.na ) for your learning and assessment information.

Also visit the Distance Education Common Space on Moodle where you can find all necessary
information and user manuals related to your distance mode studies and also engage with other
students studying on distance mode. See additional information under Section 11 below.

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12. Online Support (Ticketing) System


An online support system is provided where you can report some of the issues that you may experience regarding
your studies. This system is easily accessible from the Moodle LMS system.

Figure 4: Online ticketing system

You can also make use of the Online Support (Ticketing System) for queries to be responded to by the
responsible person within 48 hours. We recommend you use this system for Help Topics or issues listed on the
system rather than email or telephone calls.
13. Online information, Tutorials and Distance Education Common Space
Information and Tutorials are provided in each course on the Moodle Learning Management
System which you should first familiarise yourself once you first access your courses.

Figure 5: Info-Tutorials on Moodle

Indicated in Figure 4 above, the Distance Student Orientation provides video tutorials on various activities you
would perform such as submitting your assignments, converting your documents into pdf format, changing your
email address, how to check your results when assignments have been graded and so on.
Updates and information with regard to your studies and related events would be shared in the Distance Education
Common Space which you can access from any course as shown in screenshot below. All students studying on
distance mode are linked this the space where you can collaborate or discuss general issues.

Figure 6: Distance Education Common Space

You will also find the Student Information Letter, your Vacation School Timetable and User Guides in the
Distance Education Common Space.
14. Staff Contact Information
If you study conscientiously, your efforts will be rewarded. Should you need any assistance or clarification on the
module contents, you can reach the relevant staff members at the contact details as given below:

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Tutor:
For Module/Subject content related matters, Mr Mbeeli 0612064538 [email protected]
Assignments marks and CA marks queries
Student Support Coordinator: Ms. Anna-Marie Murere 0612063729 [email protected]
Ms Nelago 0612063987 [email protected]
Faculty officers: Ms T Nuuyoma 0612063609 [email protected]
Ms G Van Wyk 0612063084 [email protected]
061-2064881

Examination Officers: 061-2063715 [email protected]


Stephanie Nehoja (WHK)
For Exam marks and exam timetable, exam All exam officers at respective
related matters campuses assist students of those
campuses

eLearning Administrator: Mr Owen Lisulo 0612063381 [email protected]

Moodle related queries (technical problems), Mr Shaka Maikhudumu 0612063000 [email protected]


linking of Modules, etc.
https://elearning.unam.edu.na/sup
Please create an online ticket for any assistance port/open.php

NOTE: For additional information consult the Prospectus and UNAM General Information and Regulations
Prospectus.

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Serious offence not tolerated at all


Note well: Plagiarism
Plagiarism is “the wrongful appropriation or purloining, and publication as one’s own, of the ideas, or the expression of the
ideas of another” (OED). All published and unpublished material, whether in manuscript, printed or electronic form, is covered
under this description.
The Proctors’ Disciplinary Regulations concerning conduct in examinations (see Part 19.4. and 19.5, p. 52) state that ‘No
candidate shall present for an examination as his or her own work any part of the substance of another person’s work. In any
written work (whether thesis, dissertation, essay, coursework, or written examination, or assignment) passages quoted or
closely paraphrased from another person’s work must be identified as quotations or paraphrases, and the source of the quoted
or paraphrased material must be clearly acknowledged.’ In all written work students must be vigilant in citing the work they
have referred to or quoted from (please see further Appendix D). Examples of plagiarism and detailed advice as to how to
avoid it are given on http://www.admin.ox.ac.uk/edc/goodpractice/: you are strongly advised to consult this website.
It has been observed that some students merely download information from the Internet, copy verbatim from other printed
sources (including the Study Guide, employ other people to do their assignments for them, or plagiarise each other’s
assignments (either directly, that is, word-to-word, or through a re-arrangement of words or paragraphs in order to deceive the
tutor or marker).
These practices constitute very serious academic offences of academic dishonesty, alternatively, intellectual fraud, which
attract very serious and heavy penalties. Students must desist from such practices. Such students may score very high marks
but invariably perform very poorly in examinations. It is in the interest of such students to endeavour to exercise their own
intellectual faculties, do their own research, and personally do the set assignments.

No hardcopies are allowed, all assignment are to be uploaded through Moodle.


✓ Assignments should be submitted in PDF – only. Kindly save your assignments in PDF format
✓ Make sure that you submit one assignment as one file/document. Do not create and upload several
folders; do not zip the documents. Have 1 one document/file for 1 (ONE) entire assignment.
✓ Assignments for modules with formulas can be handwritten, scanned in one document and uploaded
on Moodle accordingly.
✓ Make sure you submit a document that is readable and virus free.
✓ Make sure you upload the right file with the relevant assignment content.
✓ After submitting your assignment on Moodle do verify on the file you uploaded. Always try to submit
your assignment few days before the due date, this allows you to double-check all the nitty-gritties.
NO LATE SUBMISSIONS WILL BE TOLERATED. NO LATE submission due to not adhering to the above
advises or guidance WILL BE ACCEPTED nor ENTERTAINED.

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Assignment 1 AFE3692 2023

Question 1 (20 Marks)

David Shampapi is the owner of Shampapi (Pty) Limited with a 28 February year-end. The business’
registered office is situated at Divundu in Kavango East region. Shampapi (Pty) Limited processes fresh
produce obtained from surrounding small scale farmers as well the correctional facility nearby. The final
products are then delivered to various businesses in Zambezi, Kavango East and West and Otjozondjupa
regions.

David who was previously a successful rugby player has been in business for many years after retiring
from his rugby career. His business has earned a good reputation in the community and is regarded as a
reliable food supplier. During January 2022, Shampapi (Pty) Limited purchased a new processing
equipment for N$3 000 000 from a vendor in Pretoria, South Africa for which immediate payment was
made via Electronic Fund Transfer (EFT). The equipment will be used to process farm produce at its main
processing complex at Divundu. The accountant of Shampapi(Pty) Limited Ms. Hildergard Haikera, a recent
accounting graduate, has recorded this transactionas an expense in the statement of profit or loss and
other comprehensive income.

In addition, Shampapi (Pty) Limited paid Ms. Hildergard Haikera N$ 40 000 on 31 January 2022 as salary,
and on this day, the business which was going through some cash flow problems due to the recent
acquisition of the processing equipment, received N$2 000 000 as a loan from David’s sister Diana
Shampapi who resides at Rundu, repayable at the end of January 2028 in full bearing no interest.

REQUIRED

a) With reference to the conceptual framework for financial reporting, explain how the transaction
of the purchase of Equipment should be recognized and presented in the financial statements of
Shampapi (Pty) Limited on 28 February 2022. (10 marks)

b) Discuss with reasons, how Shampapi (Pty) Limited should recognize, present and disclosethe N$40
000 and N$2 000 000 as at 28 February 2022. (10 marks)

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Question 2 (20 Marks)

“Grapes Haven Limited” is a company with a primary interest in the viticulture industry. The company
purchases large tracts of land and plants grapevines on these lands. When the grapes are ripe, they are
harvested and sold to major vinters (winemakers). The company employs the best vignerons (a person who
cultivates grapes for wine making) in the business and also boasts with the best grapes in the country. The
founder and managing director, Mr Sweet Grapes, attributes the excellent quality of the grapes to their
sophisticated planting process, soil quality and regular pruning, maintenance and weed control.

You have been approached by the company to help resolve certain accounting issues pertaining to the year
ended 31 December 2021:

• “Grapes Haven Limited” bought a farm in the Zambezi region area that is suitablefor growing grapes.
They paid for the farm and immediately started to develop the land and planting of grapevines. This
involved the land levelling, drainage, weed reduction, removal of wild hosts and creating fire and wind
breaks. Holes were also dug into which young grapevines were planted and fertilised. This was done
at a cost of N$200 000 per hectare.
• Once trees were planted they had to be watered and the weeds had to be controlled. The trees also
had to be pruned to ensure that they grew straight on an arbor. This was an ongoing operation with
costs continually being incurred.
• After a period of approximately 3 years the grapevines will be ready for harvest and are expected to
yield a return in excess of 30% per annum on the costs incurred to establish them.
• During the financial year ended 31 December 2021, “Grapes Haven Limited” developed 15 Hectares
at a total cost of N$ 3 million and also spent N$833 927 on watering and maintaining the trees
• The accountant reflected the cost of N$3 833 927 as an asset in the statement offinancial position of
“Grapes Haven Limited” as at 31 December 2021.

REQUIRED:

Discuss the appropriate recognition of the costs incurred in developing the planting (N$ 3 000 000)
and maintaining the plantation (N$ 833 927) in the financial statement of “Grapes Haven Limited”
for the year ended 31 December 2021. Specific reference should be made to the Conceptual
Framework of Financial Reporting.

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Question 3 (30 Marks)

The following information was obtained from the accounting records of Kuvelai Ltd a distribution of vehicle
motor parts at Oshikango a border town between Namibia and Angola:

KUVELAI LIMITED
TRIAL BALANCE ON 31 DECEMBER 2022
DEBIT CREDIT
N$ N$
Stated capital: 4 000 000 ordinary shares without par value 4 650 000
12% Preference shares capital: 400 000 shares at N$ 1each 400 000
Retained earnings (1 January 2022) 2 640 000
General reserve (1 January 2022) 837 400
8% Mortgage loan from Investec 3 000 000
Trade creditors 20 000
Land and buildings (at cost) 5 600 000
Office equipment (at cost) 560 000
Delivery vehicles (at cost) 2 400 000
Accumulated depreciation on office equipment 245 000
Accumulated depreciation on delivery vehicles 960 000
Trade debtors 1 955 000
Allowance for credit losses (1 January 2022) 104 000
Inventory 1 840 000
Cash and cash equivalents 2 200 000

Inland Revenue: Normal tax (provisional tax payments) 402 000


Sales 11 400 000
Cost of sales 7 600 000
Distribution expenses 606 000
Administrative expenses 648 000
Other operating expenses 205 400
Interest on mortgage loan paid 240 000

Additional information and adjustments:

1. The company’s authorised share capital consists of:


• 6 000 000 ordinary shares with no par value
• 10 000 000 12% preference shares at N$ 1 par value.
2. On 1 December 2022, the directors of the company decided and resolved to use their general
authorization to affect the following:
• To issue 600 000 12% preference shares to the public at par value.
• To convert the 4 000 000 no par ordinary shares into par value shares of N$ 1 each. These
transactions have not yet been recorded.
3. Annual depreciation has not yet been provided for. The company’s accounting policy states that
depreciation is written off as follows:
• Office equipment 25% diminishing balance method
• Delivery vehicles 25% straight-line method
The company does not provide for depreciation on land and buildings. Office equipment exclusively
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used for administrative purposes and delivery vehicles used in the distribution of vehicle parts. The
company did not purchase or dispose of any office or delivery vehicles duringthe year.

4. The company purchased land and buildings in 2020 for N$ 5 600 000 by taking out a mortgage
loan from Investec. The company’s accounting policy states that land and buildings should be
revalued. Mr Kangumu, a sworn appraiser, revalued the land and buildings for the first time on
31 December 2022 at a fair value of N$7 000 000. No entriespertaining to the revaluation have
been recorded.
5. Interest on the mortgage loan of N$240 000 was calculated correctly and has already beenpaid.
6. The company’s credit controller, Mr Joel Kakena, performed an analysis of the company’sdebtors
on 31 December 2022. The analysis indicated that N$204 000 of the outstandingdebtors are
expected not to be recoverable. The allowance for credit losses should be adjusted accordingly.
Credit losses are considered part of the operating expenses.
7. The shareholders approved a final ordinary dividend of 50c per share 0n 31 December 2022.
8. It was decided on 31 December 2022 to transfer a further N$22 600 to the general reserve.This
transaction has not yet been recorded.
9. The normal income tax rate for companies is 32%.

Required:

Prepare the following in accordance with the requirements of International Financial ReportingStandards
(IFRS) and the Companies Act 28 of 2004:

a) Statement of profit or loss and other comprehensive income for the year ended 31
December 2022 according to function of expenses. (20 marks)
b) Statement of financial position as at 31 December 2022. (10 marks)

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Question 4 (30 Marks)

The following is a table of balances as at 31 December 2021, extracted from the books of Katwitwi Ltd, a
public company listed on Namibia Stock Exchange whose head office is at Nkurenkuru. A detailed statement
of profit or loss and other comprehensive incomes for the year ended 31 December 2021 has already been
completed.

N$
Land and buildings at valuation 190 500
Investments (Rundu Couriers) 137 000
Accounts receivable 120 900
Cash and cash equivalents 16 000
Inventories 142 100
Share capital 450 000
12% Redeemable preference shares 100 000
10% Debentures ?
Share premium 16 000
Unclaimed dividends 2 400
10% Long-term loan 30 000
Retained income 201 500
Accounts payable 33 600
Furniture and fittings (cost) 14 800
Motor vehicles (cost) 122 300
Plant and machinery (cost) 245 600
Accumulated depreciation:
Furniture and fittings 5 400
Motor vehicles 7 100
Plant and machinery 31 200
Proposed dividend 40 000
Allowance for credit losses 5 400
General reserve 18 000

The following additional information is available:

Share capital - Authorised: Issued:


200 000 ordinary shares of N$5 each 90 000 ordinary shares of N$5 each
50 000 10% redeemable preference sharesat N$ 2 All the redeemable preference shareshave
each. been issued.

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Included in the accounts payable is an amount of N$3 600, due to NAMRA for income tax payable for this year.
This amount could not be estimated with reasonable certainty.

(i) The redeemable preference shares are redeemable at par as from31 December
2026, at the option of the company. These shares were issued 2 years ago.
(ii) The share premium arose from an issue of ordinary shares in 2020.The company has not
issued any class of shares since the first offer was made.
(iii) The company issued 400 debentures of N$100 each at a discount of 5%redeemable at
the end of 2024.The debenture discount is to be amortisedover the life of the
debentures using the effective interest rate method. The effective interest rate is
11.0845% and the accountant has preparedthe following amortization schedule:

Dat Effective Nominal Discount Discount PV


e
interest interest balance
02/01/18 2,000 38,000
31/12/18 4,212 4,000 212 1,788 38,212
31/12/19 4,236 4,000 236 1,552 38,448
31/12/20 4,262 4,000 262 1,291 38,709
31/12/21 4,291 4,000 291 1,000 39,000
31/12/22 4,323 4,000 323 677 39,323
31/12/23 4,359 4,000 359 318 39,682
31/12/24 4,399 4,000 318 (0) 40,000

(iv) The debentures and the loan are secured mortgage bond respectively over land and
buildings. The loan covenant stipulates that an amount of N$5 000 is payable every year
on 31 December.
(v) The long term loan was advanced to the business on 1 January 2020, the business has
been given a grace period of 2 years in the repayment of theloan.
(vi) Accounts receivable includes an account of N$12 000 deemed irrecoverable, this is to be
written off but had been included in in the statement of profit or loss and other
comprehensive incomes.
(vii) The bank balance of N$16 000 includes an overdraft of N$6 500 with a different bank.
(viii) The investments in Rundu couriers were made on 31 July 2020.

REQUIRED:

1. Draft the statement of financial position as at 31 December 2021 for KatwitwiLtd to comply
with the requirement Companies Act No.28 of 2004 and International Financial Reporting
Standards (IFRS). (18 marks)

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2. Prepare the notes to the financial statement for the year ending 31 December
2021 to comply with minimum requirements of companies Act No.28 of 2004 and
International Financial Reporting Standards with respect to:(12 marks)
i. Statement of compliance
ii. Statement of significant accounting policies
iii. Long term borrowings (excluding 10% debentures)
iv. Share capital

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Assignment 2 AFE3692 2023

Question 1 (20 Marks)

1.1 Briefly discuss providing a well-reasoned answer as to what you consider the difference between recording
and reporting in the practice of accounting. [ 5 marks]

2.1 Explain why the following external users of financial statements use them for decision making: [15 marks]

• Investors
• Lenders
• Suppliers
• Government
• Management
Question 2 (30 Marks)

“PEN AND INK Limited” is the largest manufacturer of stationery in Namibia. The statement ofprofit
or loss, statement of changes in equity of PEN AND INK Limited for the year ended
31 December 2022, as well as the statement of financial position of the company as at31
December 2022, are shown below:

“PEN AND INK LIMITED”


Statement of profit or loss for the year ended 31 December 2022
N$
Sales 300,000
Cost of sales (200,000)
Gross profit 100,000
Operating expenses (26,000)
Selling expenses 10,000
Administration expenses 7,000
Loss on disposal of equipment 1,000
Depreciation 8,000
Profit before tax 74,000
Income tax expense (29,600)
Profit for the period 44,400

“PEN AND INK LIMITED”


Statement of Financial Position as at 31 December 2022
2022 2021
N$ N$
ASSETS
Non- current assets 85,000 80,000
Equipment at cost 100,000 89,000
Accumulated depreciation (15,000) (9,000)
Current assets 109,800 70,500
Inventories 60,000 40,000
Accounts receivable 12,000 20,000

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Selling expenses paid in advance 1,200 1,500


Bank 36,600 9,000
194,800 150,500
EQUITY AND LIABILITIES
Equity
Share capital 110,000 100,000
Retained earnings 34,400 10,000
Non-current liabilities
Loan 10,000 20,000
Current liabilities
Account payable 20,600 10,000
Administration expenses payable 800 500
Current tax payable: income tax 19,000 10,000
194,800 150,500

“PEN AND INK LIMITED”


Statement of changes in equity for the year ended 31 December 2022

Share Retained Total


capital earnings
N$ N$ N$
Balance at 01/01/2021 100,000 10,000 110,000
Profit for the period 44,400 44,400
Dividends (20,000) (20,000)
Issue of share capital 10,000 10,000
Balance at 31/12/2022 110,000 34,400 144,400

Equipment costing N$15,000 was purchased during the year when certain other equipment was
traded in as part of the purchase price.

REQUIRED:

a) Prepare the statement of cash flows of “PEN AND INK LIMITED” for the year ended31
December 2022 using the direct method. (20 marks)

b) Prepare the note to the statement of cash flows for the reconciliation of profit before tax to
cash generated from profits for the year ended 31 December 2022. (10 marks)

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Question 3 (25 Marks)

A new managing director of Lets Eat Ltd (a company in the fishing industry) has asked you to analyse
and give your views on the relative profitability and liquidity of its two wholly-owned subsidiaries,
Canned Fish Ltd and Frozen Fish Ltd. There were no inter-company transactions. Financial statements
are given below:

ABRIDGED STATEMENT OF PROFIT OR LOSS & OTHER COMPREHENSIVE INCOMEFOR THE YEAR
ENDED 31 DECEMBER 2022
Canned Fish Ltd Frozen Fish Ltd
2022 2021 2022 2021
Turnover 45 000 38 100 17 000 14 000
Cost of sales (38 400) (30 500) (11 200) (9 400)
Gross profit 6 800 7 600 5 800 4 600
Depreciation (500) (400) (500) (300)
Other costs (4 200) (5 800) (3 400) (2 000)
Profit before tax 2 100 1 400 1 900 2 300

ABRIDGED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2022


Canned Fish Ltd Frozen Fish Ltd
2022 2021 2022 2021
Capital & 10 500 9 900 7 500 6 800
reserves
Long-term 2 100 1 800 200 0
liabilities
Current 8 500 8 200 3 200 2 200
liabilities
Overdraft 3 400 6 700 4 600 2 100
Total equity & 24 500 26 600 15 500 11 100
liabilities
Non-current 8 300 9 200 3 500 2 500
assets
Current assets 9 300 10 200 1 800 2 300
Inventories 6 900 7 200 10 200 6 300
Accounts 16 200 17 400 12 000 8 600
receivable
Total assets 24 500 26 600 15 500 11 100

Required:

a) Calculate the following ratios for each company:


• Return on equity (4 marks)
• Gross profit margin (4 marks)
• Net profit margin (4 marks)
• Current ratio (4 marks)
• Quick ratio (4 marks)

b) Comment on the ratios calculated in (a) above. (5 marks)

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Question 4 (25 Marks)

You are the accountant of Bitter Sweet Ltd, a national retailer of dark chocolate. The statement of
profit or loss and statement of changes in equity for the year ended 30 September 2021, and the
statement of financial position at 30 September 2021 are shown below. The Managing Director is
concerned that while the statement of profit or loss reflects a profit, there has been a decline in the
working capital, and overdraft facilities have been required.

BITTER SWEET LTD


STATEMENT OF PROFIT OR LOSS FOR THE YEAR ENDED
30 SEPTEMBER 2021
N$
Sales 1 200 000
Cost of sales (889 800)
Gross Profit 310 200
Other income:
Profit on sale of equipment 124 800
Operating expenses (145 120)
Profit before tax 289 880
Income tax expense (144 980)
Profit for the period 144 900

BITTER SWEET LTD


STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED
30 SEPTEMBER 2021
SHARE RETAINED TOTAL
CAPITAL EARNINGS
Balance at 1 October 900 000 177 330 1 077 330
Profit for the period 144 900 144 900
Dividends (50 000) (50 000)
Issue of share capital 300 000 300 000
Balance at 30 September 1 200 000 272 230 1 472 230

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BITTER SWEET LTD


STATEMENT OF FINANCIAL POSTION FOR THE YEAR ENDED
30 SEPTEMBER 2021
2021 2020
N$ N$
ASSETS
Non- currents assets 1 882 500 1 301 000
Land and building: carrying amount 1 170 000 1 200 000
Equipment: carrying amount 712 500 101 000

Current assets 188 440 242 120


Inventory 93 200 112 000
Trade and other receivable 95 240 76 020
Bank - 54 100
2 070 940 1 543 120
EQUITY AND LIABILITIES
Equity 1 472 230 1 077 330
Ordinary share capital 1 200 000 900 000
Retained earnings 272 230 177 330
Non- current liabilities
Interest free long- term loan 280 000 280 000

Current liabilities 318 710 185 790


Trade and other payables 49 640 35 790
Bank overdraft 219 070 -
Current tax payable - 150 000
Dividends payable 50 000 -
2 070 940 1 543 120

The following additional information is relevant:

1. On 1 July 2021, 200 000 ordinary shares were issued at a price of N$ 1.50 each
2. The land and building were purchased on 30 September 2020 for total cost ofN$ 200 000.
Land is not depreciated. The building is depreciated on the straight-line basis over a period of 30
years to a nil residual value.
3. On 31 March 2021 all the equipment used by Bitter Sweet Ltd was sold forN$ 200 550. It
had been originally purchased for N$ 505 000. This equipment was replaced on 1 April 2021 with
new equipment which cost N$ 750 000. This equipment is to be depreciated at 10% per annum
on the straight-line method toa nil residual value.
4. Included in the trade other receivables balance at 30 September 2021 is an amount of N$ 2 750
relating to insurance expenses prepaid. The amount included in the trade and other receivable
balance for 2020 was N$190.

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5. Included in the trade and other payable balance at 30 September 2021 is an amount
owing for electricity expenses. The electricity expenses amount to N$ 15 000
per year. However, no amount has been paid for the last three monthsusage.
6. A dividend for 5 cents per share was declared on 25 September 2021. It is to be paid
on 30 November 2021.

7. Operating expenses comprises:

Electricity 15 000
Insurance 6 750
Buildings: depreciation 30 000
Equipment: depreciationBad 62 750
debt 30 320
Other 300
145 120

YOU ARE REQUIRED TO:

1. Prepare a statement of cash flows of Bitter Sweet Ltd for the year ended 30
September 2021, using the direct method. (20 marks)
2. Prepare the note for the reconciliation of profit before tax to the cash generated from
operations. (5 marks)

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