ACCC 372

STUDY UNIT 4:
INVESTMENT PROPERTY

QUESTION PACK
Compiled by: Prof RR de Villiers
Reviewed by: Mr N Fourie
Copyright © 2022 edition. Review date 2022.
North-West University

No part of this document may be reproduced in any form or in any way without the written permission of the publishers.
 INDEX OF QUESTIONS
Question MA Study unit (Primary) Required L
1: V & E 17 SU 4: Investment property (IAS 40) Classification 1
2: RDF 11 SU 4: Investment property (IAS 40) Disclosure 1
3: NPF 25 SU 1: Income tax (IAS 12) Journal entries 2
SU 2: Property, plant and equipment (IAS 16)
SU 4: Investment property (IAS 40)
4: Aprop 35 SU 1: Income tax (IAS 12) Journal entries 3
SU 2: Property, plant and equipment (IAS 16)
SU 4: Investment property (IAS 40)
5: W & B 80 SU 1: Income tax (IAS 12) Disclosure 3
SU 2: Property, plant and equipment (IAS 16) Presentation
SU 3: Intangible assets (IAS 38 & SIC 32)
SU 4: Investment property (IAS 40)

Note 1: The mark allocation (‘MA’) in the suggested solutions may differ between questions of a
similar nature. Marks allocated to a question depend on the difficulty of the question, the insight
required in order to answer the question and thus the time that is required to complete the question.
The mark allocation is provided to give you a guide as to the time that will be required to complete the
question.

Note 2: The level (‘L’) of the questions are provided to give you an indication of when to do these
questions during the process of you mastering the study unit(s). Please see below for detail:

• Level 1: These questions should be done after all the study material, which includes the textbook
and class notes, have been thoroughly studied to determine if you have mastered the basic
principles in connection with the study unit(s). These questions may also contain some basic
principles of a study unit(s) completed in prior modules (i.e. ACCC 271).

• Level 2: These questions test the basic principles of the study unit(s) on a higher level and
should be completed only after the level 1 questions have been completed. These questions
may also contain some basic principles of a study unit(s) completed in prior modules (i.e. ACCC
271). These questions provide an introduction to the level this study unit(s) will be assessed at
during tests or exams.

• Level 3: These questions test more advanced principles of the study unit(s) on a higher and
more integrated level and should only be completed after the level 2 questions have been
completed. These questions are also integrated with other study units completed during this
module (i.e. ACCC 372) or previous modules of a similar nature (i.e. ACCC 271). These
questions should be tackled in preparation for tests or exams to determine whether the learning
outcomes, as stipulated in the module overview document, have been mastered. Some of these
questions will also be completed and discussed in detail during the tutorial session of this specific
study unit.

When completing the level 1 & 2 questions, the following steps should be taken for EACH
question to enable you to get test and/or exam ready:

- Step 1: Allow yourself as much time as required for you to really work through the question
slowly and ensure that you really grasp the concepts and the scenario. After completing this,
do the question completely and use as much time as needed to complete the question
properly. It is extremely important that you actually write out your attempt as you would have
done in the test and/or exam.
- Step 2: When you are done, mark yourself by comparing your written attempt to the
suggested solution. When marking yourself, it is important that you identify what aspects /
study units / principles you still need to work on and then to actually go back to those aspects
/ study units / principles in your study material and revise it again or study principles you
might have missed (or misunderstood) the first time.
- Step 3: Go back to the study material on the aspects / study units / principles you still need
to work on (i.e. those identified in Step 2) and revise those BEFORE commencing with the
next question. After having done so, and you are now comfortable with the aspects /
study units / principles you needed to work on, continue with the next question by following
the aforementioned steps again.

When completing the level 3 questions, the following steps should be taken for EACH question
to enable you to get test and/or exam ready:

- Step 1: Allow yourself 0.3 minutes per mark reading time. It is extremely important that you
read, high light etc. as you would have done in the test and/or exam.
- Step 2: Allow yourself 1.5 minutes per mark writing time after the reading time is up. It is
extremely important that you actually write out your attempt as you would have done in the
test and/or exam.
- Step 3: When your time is up, you can continue writing to complete the question. You can
consider continue writing in a different colour pen for example (after your time is up) to give
you an indication of what you would have been able to do in the actual test and/or exam
under the time allowed.
- Step 4: Mark yourself by comparing your written attempt to the suggested solution. When
marking yourself, it is important that you identify what aspects / study units / principles you
still need to work on and then to actually go back to those aspects / study units / principles
in your study material and revise it again or study principles you might have missed (or
misunderstood) the first time.
- Step 5: Go back to the study material on the aspects / study units / principles you still need
to work on (i.e. those identified in Step 4) and revise those BEFORE commencing with the
next question. After having done so, and you are now comfortable with the aspects /
study units / principles you needed to work on, continue with the next question by following
the aforementioned steps again.

DISCLAIMER: Please note that these questions are not to provide you with any scope for
the test and/or exams. It is merely for practice purposes to give you an opportunity
to evaluate your test and/or exam readiness before writing the actual tests and/or exams.
You should therefore still study every principle in each study unit, even if it is not
included in any of the test and/or exam question packs.
TIME
Allow 0.3 minutes per mark to read the question and 1.5 minutes per mark to write the suggested
solution, for example a 40-mark question should take you 12 minutes to read (0.3 x 40 marks) and 1
hour (1.5 x 40 marks) to write.

ACTION VERBS
That which you as student should learn (and that which will be assessed by the lecturer later) are
always formulated with a specific verb – which is known as the action verb in the formulation of the
outcome, assignment or exam question.

In the Accounting context the following verbs are regularly used in the formulation of exam questions
(please note the meaning of each):

Present: Show accounting information on the face of financial statements, in

the correct format.
Analyse: Investigate and discuss in detail.
Prepare: Provide an account, statement or notes in the correct format.
Calculate/determine: Calculate/determine the amount/value of.
Describe: Give a proper description of exact detail.
Discuss: Give your opinion on.
Discuss critically: Give your critical opinion on.
Prove: Support the answer with logical arguments and application of facts.
Define: Give a comprehensive definition of.
Differentiate: List and discuss the differences between.
Evaluate: Assess a matter based on certain criteria.
Give an overview: Summarise a large amount of knowledge in a logical and systematic
manner without losing the essence of the matter.
Identify: Choose the correct description of an item.
Journalise: Write up a transaction in the form of a journal entry.
Classify: Classify in a group or class.
List: List facts one by one.
Measure: Determine the amount at which the item will be included in the
financial statements.
Name: Only give the names of.
Note/write up: Write the information on the source document in the journal.
Develop/create: Develop a document/system by using given information.
Disclose: Show required accounting information in detail in the notes to the
financial statements.
Post: Carry information over from the journals to the ledger (provide a
ledger entry).
Explain: Clarify or interpret in an unbiased way.
Account for: Treat transactions in the correct accounting manner in the journal,
ledger or financial statements.
Compare: Matters are set against each other and differences and similarities are
pointed out.
Complete: Provide additional information on the given data.
Value: Determine the value of.
IMPORTANT INFORMATION
If a question does not explicitly state that the following are not required, they are required by
default:

Disclosure of comparative figures. The disclosure of comparative figures is a requirement of IAS 1

and must always be provided. If the question however does not require comparative figures to be
disclosed, the question will specifically state that comparative figures are not required.

Journal narrations. It is general practice to always provide journal narrations (descriptions), in order
to keep a record of the reasons for general journals in practice.

Presentation brackets. If uncertainty can arise over the type of account, the type of account should
be shown in brackets after the account name, e.g. in journals (i.e. specify ‘P/L’, ‘OCI’, ‘SFP’ or ‘SCE’
in brackets after the account name). It is also not sufficient to simply specify ‘SPLOCI’ – be more
specific in specifying either ‘P/L’ or ‘OCI’.

Taxation. Taxation is always required, except if it is clearly excluded in the required.

WARNING AGAINST PLAGIARISM

ASSIGNMENTS ARE INDIVIDUAL TASKS AND NOT GROUP ACTIVITIES (UNLESS EXPLICITLY
INDICATED AS GROUP ACTIVITIES).

Copying of text from other learners or from other sources (for instance prescribed material or directly
from the internet) is not allowed – only brief quotations are allowed and then only if indicated as such.

You should reformulate existing text and use your own words to explain what you have read. It is
not acceptable to retype existing text and just acknowledge the source in a footnote – you should be
able to relate the idea or concept, without repeating the original author to the letter.

The aim of the assignments is not the reproduction of existing material, but to ascertain whether you
have the ability to integrate existing texts, add your own interpretation and/or critique of the texts and
offer a creative solution to existing problems.

Be warned: students who submit copied text will obtain a mark of zero for the assignment and
disciplinary steps may be taken by the Faculty and/or University. It is also unacceptable to do
somebody else’s work, to lend your work to them or to make your work available to them to
copy – be careful and do not make your work available to anyone.
QUESTION 1 17 marks
Ignore value-added tax.

You are currently preparing for in interview at Volker & Engel (Pty) Ltd (‘V & E’) a multinational property
company that specialises in property management. You were provided with the following transactions
that require your attention in preparation for your interview next week:

Transaction 1: Plot #124

V & E purchased vacant land referred to as Plot #124. The land is currently held for an undetermined
use.

Transaction 2: Plot #185

V & E purchased vacant land referred to as Plot #185. V & E is planning to build a new office building
on the land which V & E will use for administrative purposes.

Transaction 3: Plot #198 - #202

V & E purchased five vacant plots referred to as Plots #198 to #202. V & E is planning to resell these
plots in the ordinary course of its business.

Transaction 4: Building 1
V & E purchased an office building. Since the acquisition date, the building has been leased out to
various unrelated tenants under operating lease agreements in terms of IFRS 16 Leases.

Transaction 5: Building 2
V & E purchased an office building. Since the acquisition date, the building has been used as the
head office of all the estate agents employed at V & E.

Transaction 6: Building 3
V & E purchased a five-storey office building. The first four floors are leased out to four tenants under
operating lease agreements in terms of IFRS 16. The top floor is used by V & E as a storage facility.
Each floor can be sold separately.

Transaction 7: Building 4
V & E purchased a five-storey office building. The first four floors are leased out to four tenants under
operating lease agreements in terms of IFRS 16. The top floor is used by V & E as a storage facility.
Each floor can be leased out separately under a finance lease agreement.

Transaction 8: Building 5
V & E purchased a five-storey office building. The first four floors are leased out to four tenants under
operating lease agreements in terms of IFRS 16. The top floor is used by V & E as a storage facility.
The title deed of the building doesn’t allow V & E to sell each floor separately nor can it be leased out
under finance lease agreements.

Transaction 9: Guesthouse 1
V & E purchased a guesthouse during the current financial year. The entire guesthouse is leased out
under an operating lease agreement to Sun Resorts who operates the guesthouse. V & E is also
responsible for providing security services and to maintain the property’s gardens which are
insignificant in relation to the rental agreement as a whole.
Transaction 10: Guesthouse 2
V & E purchased a guesthouse during the current financial year. The entire guesthouse is leased out
under an operating lease agreement to Sun Resorts. In terms of the contract V & E is responsible to
manage the entire guesthouse for a fixed percentage of the revenue made. The latter service is
significant in relation to the rental agreement as a whole. V & E is also responsible for providing
security services as well as to maintain the property’s gardens with the latter being insignificant in
relation to the rental agreement as a whole.

At your interview, the interview panel probed you with the following question:

MARKS
REQUIRED: Sub-
Total
total
Briefly explain the classification, supported by a reason(s), for each of the 10
property transactions above in the individual financial statements of V & E.
Reference to the Conceptual Framework is not required. 16
Communication skills – logical argument 1 17
TOTAL MARKS 17
QUESTION 2 11 marks
Ignore value-added tax.

ReeDiFine Ltd (‘RDF’) is a South African company managing a diversified property asset portfolio
comprising local and international property investments. RDF is currently in the process of finalising
its financial statements for the year ended 31 December 2019 (‘FY2019’). During the last couple of
financial years, RDF entered into the following transactions:

Vacant land
RDF purchased a piece of vacant land on 30 June 2019 for R1 500 000 in cash. The piece of vacant
land is currently held for an undetermined use. Transaction costs to the value of R85 000 was also
incurred which are directly related to the acquisition of the piece of vacant land. As of 30 June 2019,
there was clear evidence that the fair value of this piece of vacant land cannot be reliably determined
on a continuing basis since comparable market transactions are infrequent and alternative reliable
estimates of fair value are not available.

Shopping mall
The land portion of the mall was acquired from the local municipality during FY2015 for R800 000 in
cash with the intention to construct a shopping mall on this piece of land. RDF considered the land
portion to be insignificant in relation to the mall. Since the acquisition date of the land, RDF had the
intention to lease out the shops within the mall to various unrelated retailors under operating lease
agreements in accordance with IFRS 16 Leases. RDF started with the construction of the mall during
FY2016. The mall was completed and ready for its intended use on 1 April 2019.

The costs incurred over the construction period and the first year after the mall was taken into use
included the following:

Architect fees paid during FY2016 for the design of the mall R850 000
Legal fees in connection with ownership of the mall paid during FY2016 R230 000
Construction materials such as bricks, soil, cement etc. used during the *R18 000 000
construction period
Salaries and wages of employees employed during the construction period *R4 500 000
Abnormal wasted construction materials during the construction period *R960 000
Operating losses incurred after 1 April 2019 before the Mall reached its planned R1 250 000
level of occupancy
* 10% of these costs were incurred between 1 January 2019 and 31 March 2019.

The mall is sub-divided into various small, medium and large stores (i.e. shops) which are leased out
to retailers under operating lease agreements in terms of IFRS 16 Leases. RDF is also responsible
for the security, cleaning and maintenance of the shops during the lease agreements.

The fair value of the mall (i.e. the entire property) amounted to R26 500 000 (including an operating
lease accrued lease income asset amounting to R1 100 000). The fair value was determined by Mr F
Value which has the necessary qualifications. Before 31 December 2019, Mr F Value was not able to
reliably determine the fair value of the mall on a continuing basis since comparable market
transactions are infrequent and alternative reliable estimates of fair value were not available.

Additional information:
• Investment property is accounted for on the fair value model in accordance with IAS 40 Investment
Property where appropriate.
• Owner-occupied land and buildings are accounted for on the revaluation model in accordance with
IAS 16 Property, Plant and Equipment and are revalued at the end of the financial year.
 MARKS
REQUIRED: Sub-
Total
total
Prepare the investment property note, as far as possible from the given information,
to be disclosed in the individual financial statements of RDF for FY2019.
Comparative figures are not required. 10
Communication skills – presentation 1 11
TOTAL MARKS 11
QUESTION 3 25 marks
Ignore value-added tax.

NPF (Pty) Ltd (‘NPF’) is a company specialising in landscaping and is situated in Potchefstroom. NPF
is in the process of finalising its financial statements for the year ended 31 December 2019 (‘FY2019’).

NPF purchased a piece of vacant land, situated in the industrial area of Potchefstroom, on
1 January 2017 for R1 800 000 in cash. Subsequent to the acquisition of the land, NPF built a building
on the land for a total cash cost of R1 200 000. The building was ready for use on 1 July 2017. The
entire property (i.e. the land and the building) was leased to an unrelated tenant from this date for a
fixed monthly payment, over a two-year period under an operating lease agreement, in accordance
with IFRS 16 Leases.

During FY2019, NPF noted that the costs of plants etc. used in its landscaping business are
increasing dramatically. NPF therefore decided not to renew the lease on the property when it expired
and that they would rather open a plant nursery on this property to increase its profit margins. NPF’s
intention of leasing the building to tenants therefore changed on 1 July 2019.

NPF had to incur some costs to the get the building ready for use as a plant nursery amounting to
R150 000 which was paid in cash during July 2019. These costs only relate to the building, i.e. it does
not also relate to the land portion. The property was only ready for use on 1 August 2019 and the
doors were opened for the first customers on the same day.

The building had an initial useful life estimate of 20 years on 1 July 2017 with an insignificant residual
value. These estimates have remained unchanged to date. The layout of the property does not make
it possible to sell the land and the building separately nor can it be leased out separately under finance
agreements. The land and building portions of the property has however always been regarded as
significant in relation to the total value of the property on a 60:40 basis.

The South African Revenue Service allows a section 13quin capital allowance on buildings, i.e. capital
allowances of 5% per annum, not apportioned for periods shorted than a year, is allowed on buildings.

The fair value (excluding any operating lease accruals) of the entire property (i.e. the land and the
building) amounted to the following on the respective dates:

Date Fair value

31 December 2017 R2 900 000
31 December 2018 R3 100 000
1 July 2019 R3 180 000
1 August 2019 R3 200 000
31 December 2019 R3 550 000

Additional information:
• Investment property is accounted for on the fair value model in accordance with IAS 40 Investment
Property where appropriate.
• Owner-occupied land and buildings are accounted for on the revaluation model, by applying the
net replacement value method, in accordance with IAS 16 Property, Plant and Equipment and are
revalued at the end of the financial year.
• The corporate tax rate is 28% and capital gains are taxed at 22.4%.
• NPF has always had enough future taxable temporary differences to recognise any deductible
temporary differences.
 MARKS
REQUIRED: Sub-
Total
total
Prepare all the journal entries required to account for the land and buildings in the
individual financial statements of NPF for FY2019. Your deferred tax calculation
should be performed using the statement of financial position method and the
deferred tax effect of the entire property should be presented in a single journal
entry. Journal entries in connection with the lease transaction is not required.
Journal narrations are not required. Ignore current taxation. 25 25
TOTAL MARKS 25
QUESTION 4 35 marks
Ignore value-added tax.
Aprop Ltd (‘Aprop’) is a company that invests in property. Aprop is in the process of finalising its
financial statements for the year ended 30 June 2014 (‘FY2014’) and requires your assistance with
the following:
Aprop moved out of their old administration building in Sandton on 31 December 2013. The old
administration building was initially purchased on 1 July 2010 for R950 000 in cash from the
developer. The old administrative building will no longer be used for administrative purposes and is
leased out under an operating lease agreement, in accordance with IFRS 16 Leases, as from
1 January 2014. The lease agreement is renewed annually. The old administrative building was
revalued for the first time on 30 June 2013 to its fair value of R1 230 000. The fair value of the old
administrative building also amounted to the following on the respective dates (excluding any
operating lease accruals):
Date Fair value
31 December 2013 / 1 January 2014 R1 340 000
30 June 2014 R1 680 000
Aprop purchased a new and unused administration building in Rosebank during FY2014 for
R2 500 000 in cash and occupied this building from 1 January 2014. The fair value of the new
administrative building amounted to R3 000 000 on 30 June 2014. Aprop has the intention to use the
office building until the end of its useful life.
Additional information:
• Owner-occupied property, plant and equipment is accounted for on the revaluation model in
accordance with IAS 16 Property, Plant and Equipment and revaluations are performed at the end
of the financial year using the gross replacement value method. Revaluation surplus balances on
the underlying assets are realised to retained earnings over the remaining useful life of the
underlying asset.
• All office buildings have a useful life of 20 years with an insignificant residual value. Depreciation
is accounted for on the straight-line method. The land portions of both buildings are regarded as
insignificant in relation to the total value of the properties.
• The fair value model is applied to investment property in accordance with IAS 40 Investment
Property.
• Aprop has always had enough future taxable temporary differences to recognise any deductible
temporary differences.
The corporate tax rate is 28% and capital gains are taxed at 22.4%. The South Africa Revenue Service
does allow a section 13quin allowance on all office buildings amounting to 5% per year; not
apportioned for periods shorter than a year.
MARKS
REQUIRED: Sub-
Total
total
Prepare all the journal entries required to account for the two office buildings in the
individual financial statements of Aprop for FY2014. Your deferred tax calculation
should be performed using the statement of financial position method and the
deferred tax effect should be presented separately in a single journal entry, but in
two separate journal entries, one for each building. Journal entries in connection
with the lease transaction is not required. Journal narrations are not required. Ignore
current taxation. 35 35
TOTAL MARKS 35
QUESTION 5 80 marks

Ignore value-added tax.

Wheal & Break (Pty) Ltd (‘W & B’) is a company specialising in the manufacturing, buying and selling
of a wide range of bicycles. W & B is in the process of finalising its financial statements for the year
ended 31 December 2018 (‘FY2018’) and requires your assistance with the completion of the last few
outstanding matters:

Vacant land
W & B purchased two pieces of vacant land (Plot #123 & Plot #456) during FY2016 for R1 100 000
and R1 250 000 respectively. Plot #123 is held with the intention to build a factory building in the near
future. Plot #456 is currently held for an undetermined use.

During FY2018, W & B sold Plot #123 to an unrelated third party for R1 600 000 and realised a profit
on sale (before tax) of R120 000. During FY2018, W & B decided to sell this piece of land as a result
of the factory building purchased during FY2017 (see below.). No other costs were incurred in
connection with any of these pieces of land during any financial year.

The fair values of Plot #123 and Plot # 456 amounted to following on the respective dates:

Date Fair value

Plot #123 – 31 December 2016 R1 200 000
Plot #456 – 31 December 2016 R1 350 000
Plot #456 – 31 December 2017 R1 420 000
Plot #456 – 31 December 2018 R1 490 000

Land and factory buildings

The land and factory buildings were purchased on 1 January 2017 for R5 000 000 in cash. Of this
amount paid, R500 000 was attributed to the land and it is considered to be significant in relation to
the total value of the property. The land and factory buildings were available for use as intended by
management on the same date. On 1 January 2017, the useful life of the factory buildings was
estimated to be 15 years with a residual value of R1 200 000 (of which 10% relates to the land).

On 31 December 2017, the land and the factory buildings were revalued for the first time. On this
date, the fair value of the land the factory buildings amounted to R680 000 and R4 800 000
respectively. On 31 December 2018, the land and factory buildings were revalued once again. On
this date, the fair value of the land and factory building amounted to R520 000 and R3 575 000
respectively.

The South African Revenue Service (SARS) allows a capital allowance on the factory building of 5%
per annum; not apportioned for periods shorter than a year.

Office building
The office building was purchased on 30 November 2016. The following costs were incurred on
30 November 2016 in cash in connection with the purchase of the office building:

Costs incurred Amount

Cash cost R3 500 000
Transfer fees to register the building in W & B’s name R250 000
Lawyer’s fees to draft the purchase agreement R120 000
Function held to celebrate opening of new building R25 000
Non-refundable taxes paid in acquisition of building R380 000
The land portion of the office building was regarded as being insignificant. The office building was
used by the previous owners for administrative purposes. The office building was ready for and taken
into use on 1 December 2016. The office building has a total useful life of 20 years with an insignificant
residual value on this date.

The office building comprises of ten floors of equal size, make-up and value. W & B used all the floors
for administrative purposes until 30 June 2018. As of 1 July 2018, W & B started renting out five of
the floors in terms of non-cancellable operating lease agreements in accordance with
IFRS 16 Leases, to five various unrelated tenants. The lease contracts are renewed annually and the
tenants pay equal amounts of rent every year. The fair value of office building amounted to
R4 800 000 and R5 200 000 (in total) on 1 July 2018 and 31 December 2018. The make-up of the
office building makes it possible to sell each floor separately or to lease it out separately under finance
lease agreements. The SARS does not allow any capital allowances on the office building.

Trademark
Due to the success of W & B, the company decided to develop its own trademark. During FY2018,
the marketing division of W & B developed this new trademark and incurred the following costs:

Costs Amount
Salaries paid to marketing personnel R350 000
Legal fees related to the registration of this trademark R35 000

The SARS allowed the expenses incurred as a deduction during FY2018.

Website
During FY2018, the IT department of W & B developed a website. It was agreed that the website
would be used to market the new products of W & B sold under the newly developed trademark (see
above). Total costs incurred in respect of the development of the website amounted to R120 000. The
website was available for use as intended by management 1 December 2018. The SARS allowed the
expenses incurred as a deduction during FY2018.

Taxation
W & B made an accounting profit before tax of R8 500 000 during FY2018 after all the above
information was correctly taken into account. The correctly calculated current tax expense to be
recognised during FY2018 amounted to R2 570 145 and the correctly calculated deferred tax liability
balance of W & B amounted to R310 520 at the end of FY2017.

Additional information:
• Owner-occupied land and factory buildings are accounted for on the revaluation model in
accordance with IAS 16 Property, Plant and Equipment and revaluations are performed at the end
of the financial year using the gross replacement value method. Revaluation surplus balances on
the underlying assets are realised to retained earnings over the remaining useful life of the
underlying asset.
• All other items of property, plant and equipment are accounted for on the cost model in accordance
with IAS 16.
• All initial useful life and residual value estimates remained unchanged, unless the contrary is clearly
stated.
• Intangible assets are accounted for in the cost model in accordance with IAS 38 Intangible Assets.
• Depreciation and amortisation is accounted for on the straight-line method.
• Investment property is accounted for on the fair value model in accordance with IAS 40 Investment
Property.
• Tax rate reconciliations are presented in rand.
• The corporate tax rate is 28% and capital gains are taxed at 22.4%. There were no temporary
differences other than those apparent from the given information. W & B has always had enough
future taxable temporary differences to recognise any deductible temporary differences.

MARKS
REQUIRED: Sub-
Total
total
(a) Prepare the property, plant and equipment and investment property notes to
be disclosed in the individual financial statements of W & B for FY2018.
Comparative figures, total columns and qualitative disclosures as part of the
note are not required. 32
Communication skills – presentation 1 33
(b) Prepare an extract from the statement of changes in equity of W & B for
FY2018. Only include the revaluation surplus column in your extract.
Comparative figures are not required. 12
Communication skills – presentation 1 13
(c) Prepare the income tax expense note to be disclosed in the individual
financial statements of W & B during FY2018. Your calculation should be
performed using the statement of financial position method. Comparative
figures are not required. 23
Communication skills – presentation 1 24
(d) Prepare the profit before tax note to be disclosed in the individual financial
statements of W & B for FY2018. Comparative figures and qualitative
disclosures as part of the note are not required. 9
Communication skills – presentation 1 10
TOTAL MARKS 80