QUESTION 1
The following information was obtained from the accounting recordsof Williams Limited, a distribution of vehicle motor parts:
WILLIAMS LIMITED
TRIAL BALANCE ON 31 DECEMBER 20.11
DEBIT R
CREDIT R Declared capital: 150 000 ordinary shares without parvalue 2 325 000 12% Preference shares capital: 200 000 shares at R1each 200 000 Retained earnings (1 January 20.11) 1 320 000 Generalreserve (1 January 20.11) 418 700 8% Mortgage loan from Investec 1500 000 Trade creditors 10 000 Land and buildings (at cost) 2 800000 Office equipment (at cost) 280 000 Delivery vehicles (at cost)1 200 000 Accumulated depreciation on office equipment 122 500Accumulated depreciation on delivery vehicles 480 000 Trade debtors977 500 Allowance for credit losses (1 January 20.11) 52 000Inventory 920 000 Cash and cash equivalents 1 100 000 SARS: normaltax (provisional tax payments) 201 000 Sales 5 700 000 Cost ofsales 3 800 000 Distribution expenses 303 000 Administrativeexpenses 324 000 Other operating expenses 102 700 interest onmortgage loan paid 120 000  

Additional information and adjustments:
1. The company’s authorised share capital consists of: ? 500 000ordinary shares with no par value ? 200 000 12% preference sharesat R1 par value. 2. On 1 December 20.11, the directors of thecompany decided to use their general authorisation to issue sharesby issuing the following shares to the public: ? 100 000 ordinaryshares at R1.50 each.

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? 300 000 12% preference shares at par value. This was the onlyshare issue during the year and has not yet been recorded.
3. Annual depreciation has not yet been provided for. The company’saccounting policy states that depreciation is written off asfollows: ? Office equipment 25% dminishing balance method ?Delivery vehicles 25% straight-line method The company does notprovide for depreciation on land and buildings. Office equipmentexclusively used for administrative purposes and delivery vehiclesused in the distribution of vehicle parts. The company did notpurchase or dispose of any office or delivery vehicles during theyear.
4. The company purchased land and buildings (stand 34, Sandton) in2009 for R2 800 000 by taking out a mortgage loan from Investec.The company’s accounting policy states that land and buildingsshould be revalued. Mr Damon Hill, a sworn appraiser, revalued theland and buildings for the first time on 31 December 20.11 at afair value of R3 500 000. No entries pertaining to the revaluationhave been recorded. 5. Interest on the mortgage loan of R120 000was calculated correctly and has already been paid. 6. Thecompany’s credit controller, Mr Juan Montoya, performed an analysisof the company’s debtors on 31 December 20.11. The analysisindicated that R102 000 of the outstanding debtors are expected notto be recoverable. The allowance for credit losses should beadjusted accordingly. Credit losses are considered part of theoperating expenses. 7. The shareholders approved a final ordinarydividend of 50c per share 0n 31 December 20.11. 8. It was decidedon 31 December 20.11 to transfer a further R11 300 to the generalreserve. This transaction has not yet been recorded. The normalincome tax rate is currently 28% and the rate for withholding taxon dividends (dividend tax) is 15%. Required: (comparative amountsare not required.)
Prepare the following in accordance with the requirements ofInternational Financial Reporting Standards (IFRS) and theCompanies Act (71 of 2008):
(a) Statement of profit or loss and other comprehensive income forthe year ended 31 December 20.11 according to function of expenses.(b) Statement of changes in equity for the year ended 31 December20.11. (c) Disclose the note for Property, plant and equipment notefor the year ended 31 December 20.11.to comply with therequirements of IFRS and Companies Act.