Define an “asset” in terms of the International Financial Reporting Standards. (2)
Assess, with examples, whether legal ownership is a prerequisite to the initial measurement and recording of an asset. (3)
Assess whether “depreciation” meets the definition of an expense. (3)
Identify the users of the annual financial statements. (4)

Assess the following transactions and complete the table provided.

Example: The owner contributes an additional R100 000 as capital to the business.

ElementGeneral Ledger AccountDebit/CreditFinancial Statement reporting
EquityCapitalCreditStatement of Financial Position
AssetBankDebitStatement of Financial Position

Purchase a vehicle of R150 000 through vehicle financing for the company to perform site inspections. (4)
Receive a donation of R4 000 from the local supermarket. (4)
Purchase stationery of R5 000 on account. (4)
Fill up the vehicle for R800 at Sasol on the company credit card. (4)
The debit order of R3 800 for the first vehicle installment appears on the bank statement. (4)
Stock to the value of R450 was damaged in a storm. (4)
Write off a deceased client’s account of R500. (4)



General Ledger Account 



Financial Statement reporting


Prepare journal entries to record the following transactions. You are required to show all calculations:
The company adopted the straight-line depreciation method. Record the 15% depreciation on the plant and equipment purchased On 1 December 2020 for R125 000.
The allowance for credit losses account has an opening balance of R4 500. The policy requires the allowance to equate 8% of the total accounts receivable. The debtors sub-ledger totaled R52 000 prior receiving 40c in the rand on an account of R3 000. The financial manager instructed the write off on the balance.

EntryGeneral LedgerDebitCredit

Get completed answers on accounting questions

Answer 1: An asset is defined in the international financial reporting standard as a resource that is possessed by an individual or an organisation and it is held with the objective of achieving future economic benefit by using it. The resource is available to the organisation as a result of past events and it is likely to flow in benefits to the organisation in future.

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