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QUESTION 4 (30 marks) (36 minutes) The following list of balances, is an extract from the trial balance of Still Waters Ltd on 31 December 2020: R Debit / (Credit) Land at cost (1 January 2020).. 1 450 000 Buildings at cost (1 January 2020). 1 920 000 Machinery at cost 1 465 000 Motor vehicles at cost 650 000 Accumulated depreciation Motor vehicles (234 000) Additional information Land and buildings: 1.1 New land was purchased for R900 000 on 2 January 2020, on which a factory building was constructed during the current year. The construction costs amounted to R1 980 000. 1.2 Machinery with a cost of R560 000 and a residual value of R60 000, was withdrawn from production from 2 January 2020 until 30 September 2020 to be used in the construction of the building. The building was ready for use on 1 October 2020. 1.3 Existing land and buildings (purchased on 1 September 2017), at the beginning of the current financial year are owner-occupied and used as the company's administration offices, but was rented out from 1 October 2020 to third parties. This was due to only 5% of office occupancy needed since the outbreak of the Corona virus. The respective cost of the land and the buildings was R1 450 000 and R1 920 000. The respective net replacement value of the land and the fair value of the buildings on 1 October 2020 was 10% above their carrying amount on that date. 1.4 On 31 December 2020, the current financial year end of Still Waters Ltd, the fair value of the land and the fair value of the buildings on 1 October 2020 was 10% above their carrying amount on that date. 1.4 On 31 December 2020, the current financial year end of Still Waters Ltd, the fair value of the property was as follows: R Land..... 1 600 000 Buildings 1 800 000 All of the net replacement values and fair values were determined by Mr Honour an independent sworn appraiser. 1.5 Machinery and buildings are measured according to the cost model and land measured according to the revaluation model as per IAS 16 Property, Plant and Equipment. Still Waters Ltd applies the fair value model for investment property as per IAS40 - Investment property. 2. Machinery with a cost of R490 000 was disposed of at its carrying value on 1 August 2020. The company purchased all its machinery on 1 December 2017. 3. On 1 July 2020 a motor vehicle with a cost of R220 000 was purchased to replace a motor vehicle that was disposed of in the previous financial year. The following rates of depreciation are applicable: Buildings 5% straight-line method Vehicles 20% reducing balance method Machinery 20% straight-line method [TURN OVER] QUESTION 4 (continued) 5. No other transactions regarding non-current assets took place during the year. REQUIRED: Marks (a) Prepare only the Property, plant and equipment reconciliation note of Still Waters Ltd for the financial year ended 31 December 2020. Your answer should comply with the requirements of International Financial Reporting Standards (IFRS). 25 (b) Prepare only the note on Investment property of Still Waters Ltd for the financial year ended 31 December 2020. Your answer should comply with the requirements of International Financial Reporting Standards (IFRS). 5 30 Please note: The total column of Property, plant and equipment is not required. The comprehensive disclosure requirements as per IAS 16 and IAS 40, are not required. Comparative figures are not required. Show all calculations. Round off to the nearest Rand. QUESTION 4 (30 marks) (36 minutes) The following list of balances, is an extract from the trial balance of Still Waters Ltd on 31 December 2020: R Debit / (Credit) Land at cost (1 January 2020).. 1 450 000 Buildings at cost (1 January 2020). 1 920 000 Machinery at cost 1 465 000 Motor vehicles at cost 650 000 Accumulated depreciation Motor vehicles (234 000) Additional information Land and buildings: 1.1 New land was purchased for R900 000 on 2 January 2020, on which a factory building was constructed during the current year. The construction costs amounted to R1 980 000. 1.2 Machinery with a cost of R560 000 and a residual value of R60 000, was withdrawn from production from 2 January 2020 until 30 September 2020 to be used in the construction of the building. The building was ready for use on 1 October 2020. 1.3 Existing land and buildings (purchased on 1 September 2017), at the beginning of the current financial year are owner-occupied and used as the company's administration offices, but was rented out from 1 October 2020 to third parties. This was due to only 5% of office occupancy needed since the outbreak of the Corona virus. The respective cost of the land and the buildings was R1 450 000 and R1 920 000. The respective net replacement value of the land and the fair value of the buildings on 1 October 2020 was 10% above their carrying amount on that date. 1.4 On 31 December 2020, the current financial year end of Still Waters Ltd, the fair value of the land and the fair value of the buildings on 1 October 2020 was 10% above their carrying amount on that date. 1.4 On 31 December 2020, the current financial year end of Still Waters Ltd, the fair value of the property was as follows: R Land..... 1 600 000 Buildings 1 800 000 All of the net replacement values and fair values were determined by Mr Honour an independent sworn appraiser. 1.5 Machinery and buildings are measured according to the cost model and land measured according to the revaluation model as per IAS 16 Property, Plant and Equipment. Still Waters Ltd applies the fair value model for investment property as per IAS40 - Investment property. 2. Machinery with a cost of R490 000 was disposed of at its carrying value on 1 August 2020. The company purchased all its machinery on 1 December 2017. 3. On 1 July 2020 a motor vehicle with a cost of R220 000 was purchased to replace a motor vehicle that was disposed of in the previous financial year. The following rates of depreciation are applicable: Buildings 5% straight-line method Vehicles 20% reducing balance method Machinery 20% straight-line method [TURN OVER] QUESTION 4 (continued) 5. No other transactions regarding non-current assets took place during the year. REQUIRED: Marks (a) Prepare only the Property, plant and equipment reconciliation note of Still Waters Ltd for the financial year ended 31 December 2020. Your answer should comply with the requirements of International Financial Reporting Standards (IFRS). 25 (b) Prepare only the note on Investment property of Still Waters Ltd for the financial year ended 31 December 2020. Your answer should comply with the requirements of International Financial Reporting Standards (IFRS). 5 30 Please note: The total column of Property, plant and equipment is not required. The comprehensive disclosure requirements as per IAS 16 and IAS 40, are not required. Comparative figures are not required. Show all calculations. Round off to the nearest Rand

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