FAC3702 EXAM PACK NOVEMBER 2020 SOLUTION

OCTOBER –
NOVEMBER
2020

, SOLUTION 1: PROPERTY, PLANT &
EQUIPMENT & NON – CURRENT ASSETS HELD
FOR SALE

(a) Statement of profit or loss & other comprehensive income of MLM Ltd for the
year ended 31 December 2019

DISCONTINUED OPERATIONS

R
Revenue (350 000 + 25 000) 375 000
Cost of sales (175 000 + 8 000) (183 000)
Gross Profit 192 000
Other expenses (15 000 + 2 000 ∓ 67 200) (84 200)
Profit before tax 107 800
Income tax expense [(𝑖)& (𝑖𝑖) (14 000 − 4 332) (9 668)
Profit after tax 98 132
Loss after tax on measurement (52 301)
Loss on measurement of non – current asset held for sale (𝑖𝑣) (72 640)
Tax Benefit (72 640 ∗ 28%) 20 339

Profit for the year from discontinuing operations 45 831


Calculations

i. Income tax expense

R
Profit before tax 107 800
Depreciation 67 200
500 000 (125 000)
Wear & tear ( 4 )
Taxable income 50 000

Current tax expense (𝟓𝟎 𝟎𝟎𝟎 ∗ 𝟐𝟖%) 14 000