Question

The following information pertains to YBlue Close Corporation for the financial year ended 31 July 2020: 1 EXTRACT of balances at 31 July 2020 R Member's contribution: Y Yellow 270 000 Member's contribution: B Blue 110 000 Retained earnings (31 July 2019) 24 950 Revaluation reserve 34000 Loan from Y Yellow 85000 Loan to B Blue.... 60 000 Interim profit distribution to members 48000 Allowance for credit losses 1 170 Land and buildings at cost 300 000 Equipment at cost. 208 000 Investment (fixed deposit at Blond Bank) 90 000 Inventory: merchandise 101 980 Inventory consumables 3460 Long-term loan ... 48000 Bills receivable 11 510 Bill payable. 8910 Accumulated depreciation Equipment 38 880 Accrued expenses. 4320 Prepaid expenses 1 935 Bank (c) 820 Petty cash 435 Interest on loan 1 080 Debtors control 33 680 Creditors control 9690 SARS (income tax) (dr) 40 500 Profit before tax (before any applicable adjustments) 311 480 2. Additional Information 2.1 In addition to the Interim profit distribution the following needs to be paid to members: Y Yellow: Members distribution R27 000 B Blue: Members distribution R52 500 22 SA normal tax for the financial year amounted to R37 150 2.3 The long-term loan was acquired from Pretty Bank on 1 May 2018 at 12% Interest per annum, payable at the end of the year. A further loan of R R12 000 was received from Pretty Bank on 01 October 2019. The full loan must be repaid in 6 annual instaliments with the first instalment due on 1 March 2021. The loan is unsecured. The interest on loan has not yet been taken into account in arriving at the profit before tax 37 FAC1601/101/3/2020 ASSIGNMENT 02 - SECOND SEMESTER (continued) 2.4 Interest on the loan from Y Yellow is charged at 12% per annum and is capitalised at the end of each financial year end. The interest that is due to Y Yellow has not been taken into account in this current year. The loan from Y Yellow is repayable in full on 31 July 2029

Answer 1

Particulars	Amount
Land And Building	300,000
Equipment	208,000
Investment	90,000
Total value of Non Curretn Assets at Cost	598,000
Less: Accumulated Depriciation of Equipement	38,880
WDV of non current Assets	559,120

Notes:

1. Option2 if value non current assets are calculated at cost

2.Option 3 if WDV of the non curent assets are considered

3.Its assumed than fixed deposits are longterm in nature and hence it is a non current asset