Accounting 100 past papers PDF

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2019 Accounting 100 Assessment Opportunity 3 Question 1QUESTION 1 (10 MARKS)(12 MINUTES)Ignore VATAccounting Solutions Ltd (“AS”) is Mn Mccounting firm tOMt prepMres tOe finMnciMl stMtements for smMll stMrt-up Nusinesses tOMt meet tOe requirements of SmMll Medium Micro Enterprises (“SMMEs”).AS Oires...

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2019 Accounting 100 Assessment Opportunity 3

QUESTION 1

Question 1

(10 MARKS) (12 MINUTES)

Ignore VAT Accounting Solutions Ltd (“AS”) is an accounting firm that prepares the financial statements for small start-up businesses that meet the requirements of Small Medium Micro Enterprises (“SMMEs”). AS hires newly qualified accountants as their employees. These accountants then manually prepare the financial records of AS’s clients from scratch. Ignore VAT. AS’s own financial statements are prepared by the CFO, Melita Hlekwayo. Melita recently went on maternity leave and the CEO, Emily Khuzwayo is concerned that the financial records of the entity will not be prepared on time for the next annual general meeting. = With a keen interest in artificial intelligence and the fourth industrial revolution, Emily heard about computer software that automatically records and prepares the financial records of a company with minimal human input. Emily being excited about this new technology, and knowing that it will be a great asset to AS, acquired the computer software giving AS the right to ownership and use of the software. The software will be used to prepare AS’s financial statements in the absence of Melita. Transaction details Invoice price Installation cost Employee training costs (Training the accountant that will be working with the software)

R 1 500 000 20 000 1 000

AS signed the purchase agreement on 20 June 2019. The agreement states that AS has the right of use of the accounting software for 10 years. The software was installed and available for use on 20 June 2019. The software was estimated to have no residual value. AS applies the cost model accounting policy for subsequent measurement of the computer software. Emily is quite impressed by how efficient and accurate the software works. She did however realise that no transaction has been recorded for the actual purchase of the software. She is uncertain how to classify and record the purchase of this asset. REQUIRED: Discuss how the accounting software should be classified in the accounting records of Accounting Solutions. (10)

2019 Accounting 100 Assessment Opportunity 3

Question 1

QUESTION 1

(10 MARKS) Commented [MT1]: No marks awarded if student (12 MINUTES) discusses the definition of an asset

Definition of an Intangible asset

Application

An Intangible asset is an asset (1)

Emily is aware that the software is an asset (1).

Identifiable (1)

The accounting software is identifiable if: 

Commented [MT2]: Student will only be awarded the mark if they identify that it is an intangible asset.

Arises from a contractual right (1): The compute Commented [MT3]: Award the mark even if the word system was acquired in terms of a contractua “CONTRACTUAL” is not included agreement, giving them right to access and use of the software in running its operations (1).

Therefore the computer software is identifiable (1) Non-monetary (1)

The computer software is not currency, therefore it is Non-Commented [MT4]: Student can say that “it is not cash, or a bank account” to be awarded the mark monetary (1).

Without physical substance (1)

The computer software is without physical substance because it cannot be touched, seen with a human eye etc. (1). Commented [MT5]: No mark if student merely repeats that it has no physical substance

Therefore the computer software therefore meets the definition of an intangible asset (1).

Commented [MT6]: Mark for conclusion...