Tshwane University of Technology
APRIL 2024
SEMESTER TEST 2
SUBJECT: FINANCIAL ACCOUNTING IIIA
SUBJECT CODE: FAA316D
TOTAL MARKS: 50
DURATION: 2 HOURS
MEMORANDUM
NUMBER OF PAGES: 9 including this cover page
Page 1 of 9
QUESTION 1 30 Marks
REQUIRED 1
AMORTISATION TABLE
Instalment Interest Capital Capital
Date R (11%) R Balance
R
01.01.2022 R314 522 (½)
01.01.2022 (R91 332) (½) 0 (91 332) 223 190(½)
31.12.2022 24 551(½) 24 551 247 741(½)
01.01.2023 (R91 332) 0 (91 332) 156 409(½)
31.12.2023 17 205(½) 17 205 173 614(½)
01.01.2024 (R91 332) 0 (91 332) 82 283
31.12.2024 9 051(½) 9 051 91 332(½)
01.01.2025 (R91 332) 0 (91 332) 0(½)
(365 328) (½) 50 807(½) 314 522(½)
(7)
REQUIRED 2
EQUALISING LEASE INSTALMENTS
Workings
Equalised lease monthly lease payment
VAT treatment
R8 625*100/115*12: R90 000(½)
R5 000*12: R60 000(½)
R6 900*100/115*12: R72 000(½)
TOTAL R222 000 (½)
Equalized payments R222 000/36*12 months = R74 000 (½P)
(3)
Page 2 of 9
CURRENT TAX CALCULATION
2023
R
Profit (given) 350 000
Finance cost (24 551) (½)
Depreciation (R314 522*100/115)/4 (68 374) (½)
Accounting low-value asset lease expense (74 000) (½)
Profit before tax 183 075
Temporary differences (4 151)
Finance cost 24 551 (½P)
Depreciation 68 374(½P)
Accounting operating lease expense 74 000 (½P)
Actual operating lease expense (90 000) (½)
Finance lease instalments (R91 332 - R41 024/4) (½) (81 076) (½)
Taxable income 178 924
Current tax @ 30 % 53 677debit(½P)
Deferred tax @ 30 % 1 245 debit(½P)
(5.5)
REQUIRED 3
Deferred tax
Carrying Temporary Deferred tax
Amount Tax base difference
R R R R
31/12/2022 0 4 151 1 245 credit (½P)
Equipment
(247 741- 68 374) 205 123(½) 0 205 123
Lease Liability (247 741) (½) 0 (247 741)
Expense receivable
(R90 000 – R74 000) (½) 16 000 (½P) 0 16 000
0
VAT (R41 025 -R10 256) 0 (30 769) (½) 30 769
(3)
Page 3 of 9
REQUIRED 4
JOURNAL ENTRIES OF ACE LIMITED
R R
DEBIT CREDIT
1 January 2022
Right of use asset: equipment 273 497(½)
VAT input 41 025(½)
Lease liability 314 522(½)
Recognition of equipment leased under finance lease
25 February 2022
Bank 41 025(½)
VAT input 41 025(½)
Vat input claimed
31 December 2022
Depreciation - right of use asset 68 374 (½P)
Accumulated depreciation 68 374 (½P)
Depreciation of leased asset
1 January 2022
Lease liability 91 332 (½)
Bank 91 332 (½)
Payment of first lease instalment
31 December 2022
Finance charges or Interest expense 24 551 (½)
Lease liability 24 551 (½)
Interest expense raised
31 December 2022
Current tax expense 53 677(½P)
Tax payable/ SARS 53 677(½P)
Current tax for the year
31 December 2022
Deferred tax liability B/S 1 245 (½P)
Current deferred tax expense 1 245 (½P)
Deferred tax liability movement
31 December 2022
Low-value asset lease expense 90 000(½)
VAT input 13 500(½)
Bank 103 500(½)
Actual operating lease expenses paid
31 December 2022
Bank 13 500(½)
VAT input 13 500(½)
Claiming VAT from SARS
31 December 2022
Low-value asset lease expense 16 000(½)
Lease expense receivable. 16 000(½)
Accounting for low-value asset
(10)
Page 4 of 9
REQUIRED 5
ACE LIMITED
EXTRACT FROM NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
1. Lease note
1.1 Property, plant and equipment
Computer
equipment
R
Carrying amount at the beginning of the 0
year
Gross carrying amount (at cost) 0
Accumulated depreciation 0
Depreciation (68 374) (½))
Additions: Capitalized lease asset 273 497(½)
Carrying amount at end of year 205123(½P)
Gross carrying amount (at 273 497
valuation/cost) (68 374)(½P)
Accumulated depreciation
(2)
1.2 Maturity analysis of future lease payments
Undiscounted
amounts
Due in 2023 91 332(½))
Due in 2024 91 332(½))
Due in 2025 91 332(½))
Total 273 996
Page 5 of 9
QUESTION 2 20 Marks
REQUIRED 1
AMORTIZATION TABLE
Interest Instalment Capital
(20%) (20%) Capital Balance
Date R R R R
1/6/2022 562 300(½)
31/08/2022 28 115(½) (87 000) (58 885) 503 415
30/11/2022 25 171 (87 000) (61 829) 441 586(½)
28/02/2023 22 079 (87 000) (64 921) 376 665
31/05/2023 18 833 (87 000) (68 167) 308 498(½)
31/08/2023 15 425 (87 000) (71 575) 236 923
30/11/2023 11 846 (87 000) (75 154) 161 769(½)
28/02/2024 8 088 (87 000) (78 912) 82 857
31/05/2024 4 143 (87 000) (82 857) 0
133 700 (½) (696 000) (½) (562 300) (½)
(4)
REQUIRED 2
CURRENT TAX CALCULATION
2023 Alternative
R R
Profit (given) 400 000 400 000
Finance lease income (R28 115 + R25 171 + R22 079) 75 365(½) 75 365(½)
Profit before tax 475 365 475 365
Temporary differences (95 515) (86 347)
Finance lease income (75 365) (½P) (75 365) (½P)
Actual finance lease income received (R87 000*3) 261 000(½) 233 496(½)
Wear and tear (R562 300*50%) (281 150) (½) (244 478) (½)
Taxable income 379 850 389 018
Current tax @ 30 % 113 955 116 705
Deferred tax @ 30 % debit(½P) debit(½P)
28 655 debit(½P) 25 904 debit(½P)
(3)
Page 6 of 9
REQUIRED 3
Deferred tax
Carrying Temporary Deferred tax
Amount Tax base difference
R R R R
31/12/2023 376 665 (281 150) 95 515 28 655
credit(½P)
Net investment in the lease 376 665(½) 0 376 665
Equipment 0 (281 150) (½) (281 150)
(R562 300-R281 150)
(1.5)
Alternative
Deferred tax
Carrying Temporary Deferred tax
Amount Tax base difference
R R R R
31/12/2023 376 665 (290 318) 86 347 25 904
credit(½P)
Net investment in the lease 376 665(½) 0 376 665
Equipment 0 (244 478) (½) (244 478)
(R562 300*100/115-R244 478)
VAT portion 0 (45 840) (45 840)
(1.5)
Page 7 of 9
REQUIRED 4
JOURNAL ENTRIES OF SPADES LIMITED
R R
DEBIT CREDIT
1 June 2022
Finance lease debtor - Gross investment 696 000(½)
VAT Output (R562 300*15/115) 73 344(½)
Finance lease debtor - Unearned finance income 133 700(½)
Equipment (R562 300*100/115) 488 956(½)
Recognition of finance lease debtor
25 July 2022
VAT Output (R562 300*15/115) 73 344(½)
Bank 73 344(½)
VAT Output paid
28 February 2023
Bank 261 000(½)
Finance lease debtor - Gross investment 261 000(½)
The finance lease instalment received
28 February 2023
Finance lease debtor- Unearned finance income 75 365(½)
Finance lease income 75 365(½)
Finance income earned
28 February 2023
Current tax expense 113 955(½P)
Taxation payable 113 955(½P)
Current tax for the year
31 December 2023
Current tax expense 28 655(½P)
Deferred tax liability 28 655(½P)
Deferred tax liability movement
(7)
Page 8 of 9
REQUIRED 5
SPADES LIMITED
EXTRACT FROM NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 28 FEBRUARY 2023
1. Net investment in finance lease
R
Carrying amount – beginning of year 0
Net investment of new leases commenced during the year 562 300(½)
Lease payments received (261 000) (½)
Lease finance income 75 365(½)
Carrying amount – end of year 376 665
2. Maturity analysis of future lease payments receivable
Future lease payments expected to be received:
Gross Unearned
investment finance
Net investment
(undiscounted)
Income
(Discounted)
R R R
- 2024 348 000(½) 54 192 (½) 293 808(½)
- 2025 87 000(½) 4 143(½) 82 857(½)
Total 435 000 (58 335) 376 665
4.5
Page 9 of 9
