ACCC272 Class Test 1 2024 mark plan
Student No #REF!
Student Name Err:504
Student Mark
Q1a 27.00 -
Q1b 8.00 -
Q1c 9 -
Q1d 6 -
Total 50.00 - 0.0%
ACCC272 - Test 1 - 2024
Question 1 (a)
Suggested Solution
Notes to marker
Question 1 a marks -
Hydrate Hard (Pty) Ltd
Extract of the notes to the financial statements for the year ended 31 December 2023
Communication: Presentation and layout 1 Company name, name of statement, YE, currency (all must be present)
✘
*Penalise with 1 for each balance (RM or FG) if calc not used or no note
1. Accounting Policy
Inventories
1
Inventories are valued at the lower of cost price and net realisable value.
The cost of raw materials are determined at first in first out (0.5)and finished goods are Both FIFO and WA must be mentioned in the correct context to
1
determined at weighted average cost(0.5) receive the mark.
4. Inventories 2023
R
Raw Material (C1) 75,000 0.5 P 0.5 for lower of their cost or their NRV
Finished Goods (C2) 45,500 0.5 P 0.5 for lower of their cost or their NRV
120,500
C1. Raw Materials
Units
(Big sheets) Cost
R
Opening RM 5 34,000 0.50 0.5 for R34 000
Purchases (647 546 + 10 000) 100 647,546
700,000 1.00 0.5 for 100 and 0.5 for *R7 000
Purchase Cost (100* R7 000)
Less trade discount 5% - 35,000 0.50 for less 5%
665,000
Portion paid in Feb 50% (665 000*50%) 332,500 0.50 0.5 for *50% of Balance after trade discount
-0.5 if 3% discount is also deducted (penalise with line 34)
Deferred Settlement amount
1.50
FV=332 500(0.5), n=1(0.5),i=9%(0.5), Comp PV)
305,046
Total cost of RM purchase (322 525+305 046) 637,546
Plus Delivery Cost 10,000 0.50
Total cost price of RM purchased 647,546
Less Transfer to WIP(amount given) 603,800 0.50
Closing balance
Cost= (34 000+ 647 546-603 800)=77 746 77,746
Alternative 1 for NRV calc: calc done in total
Number of units in closing balance
Amount transferred to WIP = 603,800
Minus OB of RM (transferred first) - 34,000
569,800 0.50 0.5 for 603 800 - 34 000
Therefore OB units were transferred to WIP and CB only consists of current
year purchase cost per unit.
Current year cost per unit = 647 546/100 = 6,475 0.50 P 0.5P for 647 546/100
Total cost of current year purchased items sent to WIP = 569,800
Cost per unit = 6,475
Number of units purchased in the current year, sent to production 88.00 0.50 0.5P for 569 800/6475
Therefore CB units = 100 - 88 = 12.00 units 0.50 0.5P for 100 - 88
NRV
120 Buckets 1.00 0.5P for 12 x 20, 0.5 for /2
12 Big Sheets x 20 small sheets per big sheet /2 buckets per small sheet =
Selling Cost (R1300(0.5)*120(0.5) 156,000 1.00 0.5 for R1300, 0.5P for 120
0.5P for 12, 0.5 for 6 750
1.00 If conversion cost/cost to complete is used as the NRV, only award
1 of the 0.5 marks for this line.
less conversion cost per big sheet (12 * 6 750) - 81,000
NRV 75,000
Award only either the yellow or the pink
ALTERNATIVE 2 FOR NRV CALC in block above; calc done per sheet
Number of units in closing balance of RM
Opening balance in units 5 0.50
Purchased 100 0.50
Used (930 (0.5) x 2 (0.5)/ 120(0.5) = - 93 1.50
Calc
CB in units (number of big sheets) 12
NRV
Selling price per big sheet (1300 (0.5) x 20 (0.5) / 2 (0.5)) OR (1300 (0.5)x 10 (1)) 13,000 1.50
Calc
less conversion cost per big sheet - 6,750 0.50
NRV per sheet 6,250
Total NRV (6 250 x 12 (0.5P)) 75,000 0.50 P For their NRV per sheet x their number of sheets
C2 Finished goods R
Opening Balance 182,000 0.50
WIP 1,554,280
Raw Materials 603,800 0.50 P from C1
Water and Electricity (73 000*0.8) 58,400 1.00 0.5 for each input
Consumables 34,729 0.50
Salaries: Production workers 610,000 0.50
Depreciation: Moulding equipment 8,000 0.50 Only award if not added to FC/ Can award if added as variable cost
Storage Costs (50 900 (0.5)*35%(0.5)*75%(0.5)) 13,361 1.50 0.5 for each input
Fixed Man O'H (C3) 225,990 C3
Total Finished Goods 1,736,280
FG CB units
OB number or buckets 130 0.50
Plus number of manufactured buckets
Buckets manufatured 930 0.50
1060
Less buckets sold -1025 0.50
35
Total cost / total units = WA [1 736 280/ 1060] 1,638.00 0.50 P 0.5P for total cost / total units
Total number of CB units 35
x WA cost per unit 1,638.00
Closing balance Finished Goods 57,330.00
NRV - FG
Selling Price (R1300*35) 45,500 0.50 P
C3. Fixed Manufacturing Overhead
Salaries and wages: Production management 180,026 0.50
Depreciation: Cutting machine (60 000(0.5)-5 000(0.5)/10(0.5)*90%(1) 4,950 2.50 0.5 for each input
Storage Costs (50 900*35%(0.5)*25%(0.5)) 4,454 1.00 0.5P for 50 900*35% and 0.5 for 25%
Alt (50 900*35)(0.5P)-13 361(0.5) C2
Rental of building (70 000*80%) 56,000 0.50 for 70 000*80%
Actual Fixed Man OH Cost 245,430
Normal units of production 1,010 0.50
Actual units of production 930 0.50
Absorbed fixed man O'H (245 430/1 010*930 225,990
Available
Total Marks Q1a 27.00
Markers comments Student remark
comment Marker comment on remarks
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A
JOURNAL ENTRIES
[Note to marker: Account names should be correct to earn the "journal" mark. If nothing in brackets default SoFP
Journal entries for the year ended 31 December 2023
*Penalise Journal direction if abbreviated without a key. R
Dr
31 December 2023
Finance Cost (P/L) 160,417
Loan (SoFP)
(Interest incurred on the loan)
Accrued interest / Interest receivable (SoFP) 67,708
Interest Income (P/L)
(Interest income earned on a deposit account)
Building (SoFP) 83,333
Finance Cost (P/L)
(Capitalisation of borrowing costs)
ACCC272 - Test 1 - 2024
Question 1 (b)
Suggested Solution
MA
mark. If nothing in brackets default SoFP (e.g. Dtax). ]
Question 1b marks -
R
Cr
1.5 Calcs
160,417 0.5 Jnl direction
3.0 Calc
67,708 0.5 Jnl direction
2.0 Calc
83,333 0.5 Jnl direction
-
Max 8
Notes to Markers Markers comments
(2 500 000(0.5)*11%(0.5)*7/12)(0.5)
Must be credited to loan
(2500000*6.5%(0.5)*1/12(0.5)+
(2 500 000-750 000)(0.5)*6.5%*5/12(0.5)+
(1750 000-500 000)(0.5)*6.5%*1/12(0.5)
(160 417*6/7(0.5) - (1750000*6.5% x 5/12(0.5) - (1250
000 (0.5) x6.5% x1/12(0.5))
OR (2500 000 x 11% x 6/12(0.5)) - (1750000 x
6.5%*5/12(0.5) - (1250 000 (0.5) x6.5% x1/12(0.5))
Student remark
comment Marker comment on remarks
ACCC272 - Test 1 - 2024
Question 1 (c)
Suggested Solution
Marker guidance: In errors or omissions the mark can only be awarded if it is stated what is incorrect or what is wrong, or wh
statement without saying if it is wrong, lacks context and cannot be given a mark. The reason for Theory and correct applica
awarded if correct.
A.
No Errors/Omissions
Theory
1 A liability is not a present economic resource of an entity (0.5)
There was no definition/explanation of what a present obligation
2 is. (0.5)
It was not noted when a past event exists/ what a past event is, is
3 not discussed/ definition of past event is not given. (0.5)
5 It is incorrect to state that it will result in the transfer of cash(0.5)
Errors/Omissions
It is incorrect to apply a present obligation by stating that is is
present because HHL signed a loan agreement on 26 May 2023
with Abantubethu Bank to transfer R2 500 000, which makes it
1 present in 2023.(0.5)
It is not correct and complete to state that on 1 June 2023 HHL
received R2 500 000 and will have to return if they do not want
2 it. Therefore, the past event is on 1 June 2023. (0.5)
It is not correct to state that there was no outflow of cash as HHL
3 received R2 500 000. (0.5)
ACCC272 - Test 1 - 2024
Question 1 (c)
Suggested Solution
Question 1c -
ed if it is stated what is incorrect or what is wrong, or what should not have happened. Merely listing a
given a mark. The reason for Theory and correct application for the application part, can however still be
Reasons for the errors
1
The definition should be that a liability is a present obligation of an entity (1) 1.5
It should have been included that a present obligation is a duty or a responsibility
1
that an entity has no practical ability to avoid.(1) 1.5
It should have been noted that a past event of a liability only exists if the entity
has already taken an action(0.5) or obtained a benefit (0.5) 1.5
It should state that the liability definition says: which will result in the transfer of
1
economic benefits (1) 1.5
Correct application
The application should be:
HHL signed a loan agreement with Abantubethu on 26 May 2023 (0.5)and R2
500 000 was transferred into HHL's bank account on 1 June 2023 (0.5). As a
result of signing the agreement and receiving the money from the bank, HHL has 1
the responsibility to pay back the loan, which cannot be avoided since they
accepted the funds(1). 2.5
R2 500 000 was transferred into HHL's bank account on 1 June 2023(0.5),
therefore HHL obtained a benefit (0.5), and as a result HHL will have to pay back
R2 500 000 plus 11% interest (economic resource) to Abantubethu bank, which 1
they would not have had to transfer had they not accepted the funds.(1) 2.5
The transfer of economic benefits will be the payments of 11% interest annually
and 20 equal capital repayments from 1 May 2025 to be made to the bank in the 1
future. (1) 1.5
Communication skills: Logical argument 1
Available for 1c 12.5 0
Max for 1c 8.0 0
Communication skills: Logical argument (awarded in line 20) 1.0 0
Total Max Part c 9.0 0
Student remark Marker comment on
Notes to Marker comment comment remarks
Identified the error and gave relevant reasons
ACCC272 - Test 1 - 2024
Question 1 (d)
Suggested Solution
Theory
An entity shall classify a liability as current when:
- It expects to settle the liability in its normal operating cycle,
- It hold the liability primarily for the purpose of trading,
- The liability is due to be settled within twelve months after the reporting date or
- It does not have the right at the end of the reporting period to defer settlement of the liability for at least
twelve months after the reporting period
Other liabilities shall be classified as non-current liabilities
- The balance of the loan, is partially repayable every 31st of May year (from 31 May 2025) outside the normal
operating cycle which is said to be twelve months for HHL.
- The loan from Abantubethu is not held for purpose of trade as it is held to finance a long-term asset.
- The balance of the loan is payable from 31 May 2025, which is not within twelve months after the reporting
date 31 December 2023.
- In terms of the loan agreement, HHL's current assets as a percentage of interest bearing loans should not be
reduced to below 50%(1) and based on the assessment made HHL adhered to the requirement. As a result, HHL
does have the right to defer settlement to a period more than twelve months after reporting period.(1)
Based on the above HHL should classify the balance of the loan as non-current liability as at
31 December 2023.
ACCC272 - Test 1 - 2024
Question 1 (d)
Suggested Solution
Question 1d Marks -
sify a liability as current when:
the liability in its normal operating cycle, 0.5 ✘
primarily for the purpose of trading, 0.5
to be settled within twelve months after the reporting date or 0.5
e right at the end of the reporting period to defer settlement of the liability for at least
the reporting period 0.5
be classified as non-current liabilities 0.5
loan, is partially repayable every 31st of May year (from 31 May 2025) outside the normal 1
h is said to be twelve months for HHL. 1
ntubethu is not held for purpose of trade as it is held to finance a long-term asset. 1 1
loan is payable from 31 May 2025, which is not within twelve months after the reporting 1
023. 1
1
n agreement, HHL's current assets as a percentage of interest bearing loans should not be
%(1) and based on the assessment made HHL adhered to the requirement. As a result, HHL 1
o defer settlement to a period more than twelve months after reporting period.(1) 2
HHL should classify the balance of the loan as non-current liability as at
1
1
Available 8.5 0
Max 6.0 0
Notes to Marker Marker comment Student remark comment
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