FAC3701 ASSIGNMENT 2 SEMESTER 2 DUE 10 SEPTEMBER 2025 COMPLETE ANSWERS PASS GUARANTEED

FAC3701 ASSIGNMENT

Part a: Calculate the deferred tax balance

Deferred tax balance as at 30 June 2024

1. *Inventory*: Difference of R220,000 (Weighted average vs FIFO). Tax rate = 28%.

- Deferred tax liability = R220,000 * 28% = R61,600.

2. *Machinery*: Carrying amount R675,000, Tax base R540,000.

- Difference = R135,000. Tax rate = 28%.

- Deferred tax liability = R135,000 * 28% = R37,800.

3. *Allowance for credit losses*: Carrying amount R80,000. 25% deductible for tax.

- Tax base difference = R80,000 * 25% = R20,000.

- Deferred tax asset = R20,000 * 28% = R5,600.



Deferred tax balance (30 June 2024) = R61,600 + R37,800 – R5,600 = R93,800 *Deferred tax liability*.



Deferred tax balance as at 30 June 2025

1. *Inventory*: Difference of R80,000. Tax rate = 27%.

- Deferred tax liability = R80,000 * 27% = R21,600.

2. *Machinery*: Carrying amount R350,000, Tax base R360,000.

- Difference = -R10,000. Tax rate = 27%.

- Deferred tax asset = R10,000 * 27% = R2,700.

3. *Allowance for credit losses*: Carrying amount R100,000. 25% deductible.

- Deferred tax asset = R100,000 * 25% * 27% = R6,750.



Deferred tax balance (30 June 2025) = R21,600 – R2,700 – R6,750 = R12,150 *Deferred tax liability*.