FAC3701 Assignment 1 Semester 1 of 2021

FAC3701 ASSIGNMENT 1 – SEMESTER 1 OF
2021
a) Considering that the SA Revenue Service does not allow a tax allowance on the
administration building, the difference in the carrying amount and the tax base
resulting from the depreciation provided on the building will be regarded as an
exempt difference. Exempt differences do no result in deferred tax implications,
hence there will be no deferred tax on the administration property.

b) General journal


DR CR
R R
Interest on late payment (P / L) 13 000
SA Revenue Service (SFP) (553 000 − 13 000) 540 000
Bank (SFP) 553 000



c) Calculation of correct profit before tax for the year ended 31 December 2020

R
Profit before tax (given) 2 486 750
Profit on sale drone (95 000 − 78 750) 16 250
10
Offsite data backup services (12 000 ∗ ) 10 000
12
Interest on late payment of provisional tax (13 000)
Adjusted profit before tax 2 500 000


d) Calculation of deferred tax balance for the year ended 31 December 2020

Carrying Tax Base Temporary Deferred Tax
Amount Difference Asset /
(Liability) @
28%
R R R R
Drones (𝑖) 112 500 126 000 (13 500) 3 780
Allowance for credit losses (𝑖𝑖) 200 000 50 000 (150 000) 42 000
Prepaid expenses 10 000 - 10 000 (2 800)
Deferred tax asset (153 500) 42 980




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