At the end of an accounting period, the cost of a company's inventory is R540 000. This includes damaged items with a cost of R30 000 which are expected to be sold for only R12 000 (commission of 5% of the sales value will be incurred). All other items of inventory have a net realisable value which exceeds cost.

What is the amount at which the company's inventory should be recognised at the end of the period?

 (2 Marks)

Answer:  R

Note: Enter only the amount (do not show your calculation, and do not make use of spaces, full-stops, commas or R-signs). Example: 745000

On 31 December 2022, a company has partly completed inventory with a cost to date of R52600. It is expected that further costs of R17800 will be incurred in order to complete the inventory. It will then be sold for R95000. Selling costs will be R4000.

What are the cost and net realisable value (NRV) of this inventory on 31 December 2022?

 (4 Marks)

Answer:

Cost: R

NRV: R

Note: Enter only the amount (do not show your calculation, and do not make use of spaces, full-stops, commas or R-signs). Example: 74000

On 1 March 2023, a product was sold to a customer for R81995 on credit. The amount is payable on 28 February 2025.

Assume the financing component is significant and the relevant discount rate is 15% per annum.

What is the amount that will be recognised as revenue on 1 March 2023?

(2 Marks)

Answer: R .

Note: Round off to the nearest Rand, if applicable and only enter the amount (do not show your calculation, and do not make use of spaces, full-stops, commas or R-signs). Example: 74000

(1 Mark)

(1 Mark)

A company enters into a contract to build a factory. The agreed price is R12 million, and the specified completion date is 30 November 2024. However, the contract provides that the company should receive an incentive payment of a further R1 million if the factory is completed by 30 September 2024. Similarly, the price will be reduced by R1 million if the factory is not completed by 30 November 2024.

The company estimates that there is a 20% probability that the factory will be completed by 30 September 2024, a 70% probability that it will be completed during November 2024 and a 10% probability that it will not be completed until after 30 November 2024.

What is the expected value of this transaction? Ignore the time value of money.

(2 Marks)

Answer: R

Note: Enter only the amount (do not show your calculation, and do not make use of spaces, full-stops, commas or R-signs). Example: 7400000

(1 Mark)

A company enters into a contract to supply three distinct products to a customer. The supply of each of these products is regarded as a separate performance obligation. The stand-alone prices of the three products (if sold separately) are:

• Product A: R18750
• Product B: R36000
• Product C: R41250

The agreed contract price is R86400. How should this price be allocated to the performance obligations?

All the prices above exclude VAT.

(3 Marks)

Answer:

Product A: R

Product B: R

Product C: R

Note: Enter only the amount (do not show your calculation, and do not make use of spaces, full-stops, commas or R-signs). Example: 74000