Jennings bought an asset before 1 October 2001. During current year of assessment, she sold the asset for R500 000. She did not keep an accurate record of the expenditure or the cost of the asset. The Market Value of the asset on 1 October 2001 was R600 000. YOU ARE REQUIRED to determine the base cost of the asset.a.The base cost is limited to the Proceeds of R500 000 because the Proceeds are less than the Market Value.b.R200 000, the base cost is 20% of the (Proceeds less cost incurred after 1 October 2001) plus expenditure incurred after 1 October 2001. This is also known as an anti-avoidance measure.c.The base cost is R600 000, the Market Value of the asset on 1 October 2001. Jennings can use the Market Value even if it creates a loss.d.The base cost is R100 000 which is the Market Value of the asset on 1 October 2001 less Proceeds of R500 000 as the sale of this asset cannot create a loss.

During the current year of assessment Hendrix sold an asset that was acquired before 1 October 2001. The selling price is greater then all the costs incurred on the asset. The Market Value of the asset was determined on 1 October 2001. The Market Value on 1 October 2001 is greater than the Time-Apportionment Base (TAB) cost and 20% of the Proceeds less allowable costs incurred on or after 1 October 2001. The Proceeds are greater than the Market Value of the asset on 1 October 2001. Hendrix can prove all the costs incurred before and after 1 October 2001. The Base Cost of the asset is:a.The Market Value on 1 October 2001b.Time-Apportionment Base (TAB) costc.20% of the Proceeds less allowable costs incurred on or after 1 October 2001.d.The Market Value on 1 October 2001 plus all costs incurred after 1 October 2001.

During the current year of assessment Daniella sold an asset that was acquired before 1 October 2001. The selling price is greater than all the costs incurred on the asset. The Market Value of the asset was determined on 1 October 2001. The Time-Apportionment Base (TAB) cost is greater than the Market Value on 1 October 2001 and 20% of the Proceeds less allowable costs incurred on or after 1 October 2001. Daniella can prove all the costs incurred before and after 1 October 2001. The Base Cost of the asset is:a.Time-Apportionment Base (TAB) cost plus all costs incurred after 1 October 2001.b.Time-Apportionment Base (TAB) costc.The Market Value on 1 October 2001d.The Market Value on 1 October 2001 plus all costs incurred after 1 October 2001.

Cristal Order acquired an asset before 1 October 2001. She sold the asset during the current year of assessment for a price less than the original price. The Market Value on 1 October 2001 was determined. The Proceeds received from the sale of the asset are greater than the Market Value determined on 1 October 2001. The original purchase price of the asset is greater than the Market Value on 1 October 2001. You can assume that there are no allowable costs incurred after 1 October 2001 and that the Purchase price is the only cost incurred prior 1 October 2001. The base cost of the asset is:a.20% of the Proceedsb.The Proceedsc.The Time-Apportionment Base Costd.The market value on 1 October 2001

Question # 6Plant, measured using the cost model, had a carrying amount of Rs.80,000 on 31 December 2002cost Rs.100,000, accumulated depreciation Rs.20,000.All criteria for classification as a non-current asset held for sale were met on 1 January 2003The following values were established on this dateFair value C70 000 Costs to sell C5 000Required:Show the journal entries relating to the reclassification of the plant assuming that:a. On 30 June 2003 (6-months later) the fair value is Rs.60,000 and expected costs to sellwas Rs.3,000b. On 30 June 2003 (6-months later) the fair value is Rs.70,000 and expected costs to sellwas Rs.2,000

Jennings Advertising Inc. reported the following on its December 31, 2002, balance sheet:Equipment                                                                                                                    $500,000Accumulated depreciation—equipment                                                                  $135,000In a footnote, Jennings indicates that it uses straight-line depreciation over 10 years and estimates salvage value as 10% of cost.  What is the average age of the equipment owned by Jennings?