FAC3701
ASSIGNMENT 1 SEMESTER 1 2024
, FAC3701/101/1/2024
ASSESSMENT 01 (First semester) (30 marks)
WRITTEN ASSESSMENT
Ndlovu Jam Ltd is a company specializing in the manufacturing of various types of
jams and sauces.
The following is an extract of Ndlovu Jam Ltd’s trial balance for the year
ended 31 December 2023:
Notes Debit Credit
R R
Administration building – cost 1.1 1 500 000
Delivery vehicles – cost 1.2 1 150 000
Administration building – accumulated depreciation 1.1 150 000
Delivery vehicles – accumulated depreciation 1.2 330 000
Trade receivables 2 115 000
Profit before tax 3 962 000
Additional information
1. Property, plant and equipment
1.1 Administration building
Ndlovu Jam Ltd acquired an administration building at a cost of R1500 000 on
1 January 2022. On this date the administration building was available for use as
intended by management. The administration building has a residual value of Rnil
and is depreciated over 20 years according to the straight-line method. The
SA Revenue Service does not allow a capital allowance on the administration
building.
1.2 Delivery vehicles
On 1 January 2023 Ndlovu Jam Ltd purchased a new delivery vehicle for
R650 000. The delivery vehicle was available for use, as intended by management,
and brought into use on this date.
Ndlovu Jam Ltd sold a delivery vehicle for R550 000 at year end on
31 December 2023. The delivery vehicle was originally acquired on
1 January 2022 at a cost price of R500 000. The delivery vehicle was available for
use, as intended by management, and brought into use on this date. On the date
the delivery vehicle was sold, the accumulated depreciation amounted to
R200 000. Only the following journal entry was recorded for the sale of the delivery
vehicle in the accounting records of Ndlovu Jam Ltd for the year ended
31 December 2023:
Dr Cr
R R
Bank (SFP) 550 000
Sale of delivery vehicle (P/L) 550 000
Recording of sale of delivery vehicle
1
, FAC3701/101/1/2024
ASSESSMENT 01 (First semester) (continued)
The delivery vehicles are depreciated according to the straight-line method over
five (5) years with no residual value.
The SA Revenue Service allows a capital allowance over four (4) years (not pro-
rata) on the delivery vehicles.
No other delivery vehicles were acquired or sold during the year.
2. Trade receivables are as follows:
2022 2023
R R
Trade receivables 130 000 150 000
Allowance for credit losses (25 000) (35 000)
105 000 115 000
The SA Revenue Service allows 25% of the allowance for credit losses as a
deduction. Actual credit losses incurred are written off directly to the statement of
profit or loss and other comprehensive income and not against the allowance for
credit losses.
3. Profit before tax
Included in profit before tax are the following line-items:
2023
R
• Foreign income received from China. The foreign income is not 180 000
taxable in South Africa in terms of a double taxation agreement.
Ndlovu Jam Ltd paid foreign taxes of R27 000 on this income.
• Allowance for credit losses (refer 2) 10 000
• Sale of delivery vehicle (refer 1.2) 550 000
• Donation (not tax deductible) 13 000
• Depreciation – administration building 75 000
• Depreciation – delivery vehicles 230 000
• Insurance premium paid for the year 1 November 2023 to 84 000
31 October 2024.
4. Taxation
• The company provides for deferred tax on all temporary differences according
to the statement of financial position approach. There are no exempt or
temporary differences except those mentioned in the question. There is
certainty beyond any reasonable doubt that the company will have sufficient
taxable profit in future against which any deductible temporary differences can
be utilised.
• The deferred tax liability balance was R1 750 on 31 December 2022, which you
may assume to be correct.
2
, FAC3701/101/1/2024
ASSESSMENT 01 (First semester) (continued)
• The SA Normal tax rate changed from 28% in 2022 to 27% in 2023. The capital
gains tax inclusion rate is 80%.
• Ignore the implications of Value Added Tax (VAT).
• The following is an extract of the statement of financial position “SA Revenue
Service - current tax” general ledger account of Ndlovu Jam Ltd for the year
ended 31 December 2023:
SA Revenue Service - current tax
R
Debit R Credit
31/07/2023 Bank (1st 40 000 01/01/2023 Opening balance 20 000
provisional tax (relating to 2022
payment for tax assessment) b/d
2023, including
penalties for
late payment
of R2 000)
31/12/2023 Bank (2nd 52 000
provisional tax
payment for
2023)
28/02/2023 Bank (Final 23 000 31/12/2023 Closing balance c/d 95 000
payment for
2022 tax
assessment)
115 000 115 000
01/01/2024 Opening ba-
lance b/d 95 000
• The accountant of Ndlovu Jam Ltd has not yet made provision for current tax
in the financial statements of Ndlovu Jam Ltd for the year ended
31 December 2023.
• Ndlovu Jam Ltd agrees with the 2022 tax assessment issued by the SA
Revenue Service. The difference is due to expenses claimed by Ndlovu Jam
Ltd for the 2022 tax year which were not allowed by the SA Revenue Service.
5. Assume all amounts to be material.
3
, FAC3701/101/1/2024
ASSESSMENT 01 (First semester) (continued)
REQUIRED:
Marks
a) Using the additional information, calculate the correct profit before tax in the 4
statement of profit or loss and other comprehensive income of Ndlovu Jam Ltd
for the year ended 31 December 2023.
b) Calculate the deferred tax balance in the statement of financial position of 6½
Ndlovu Jam Ltd at ended 31 December 2023 using the statement of financial
position approach. Indicate if the balance is a deferred tax asset or deferred
tax liability. Your answer must comply with the requirements of IAS 12, Income
taxes.
c) Calculate the current tax due to the SA Revenue Service by Ndlovu Jam Ltd 8½
for the year ended 31 December 2023. Use the profit before tax calculated in
(a) as your starting amount.
Your answer must comply with the requirements of IAS 12, Income taxes. The
movement in temporary differences in the current tax calculation should
be calculated using the statement of financial position approach.
d) Prepare the necessary journal entries to correctly record the deferred tax and 3½
the current tax respectively, as calculated in (b) and (c) above, in the
accounting records of Ndlovu Jam Ltd for the year ended 31 December 2023.
Journal narrations are not required.
No abbreviations for general ledger account names in your journals may be
used.
Indicate in your journal if it is statement of financial Position (SFP) or statement
of profit or loss and other comprehensive income (P/L) general ledger
account.
e) Disclose the income tax expense note, excluding the tax rate reconciliation, in
the notes to the annual financial statements of Ndlovu Jam Ltd for the year 7½
ended 31 December 2023, according to the requirements of IAS 12, Income
taxes.
Comparative amounts are not required.
No accounting policy notes are required.
30
Please note:
Your answer must comply with the requirements of International Financial Reporting
Standards (IFRS).
All calculations must be shown.
All calculations are to be done to the nearest Rand.
Ref: / FAC3701_2024_TL_101_1_B.pdf
©
UNISA 2024
4
,
ASSIGNMENT 1 SEMESTER 1 2024
, FAC3701/101/1/2024
ASSESSMENT 01 (First semester) (30 marks)
WRITTEN ASSESSMENT
Ndlovu Jam Ltd is a company specializing in the manufacturing of various types of
jams and sauces.
The following is an extract of Ndlovu Jam Ltd’s trial balance for the year
ended 31 December 2023:
Notes Debit Credit
R R
Administration building – cost 1.1 1 500 000
Delivery vehicles – cost 1.2 1 150 000
Administration building – accumulated depreciation 1.1 150 000
Delivery vehicles – accumulated depreciation 1.2 330 000
Trade receivables 2 115 000
Profit before tax 3 962 000
Additional information
1. Property, plant and equipment
1.1 Administration building
Ndlovu Jam Ltd acquired an administration building at a cost of R1500 000 on
1 January 2022. On this date the administration building was available for use as
intended by management. The administration building has a residual value of Rnil
and is depreciated over 20 years according to the straight-line method. The
SA Revenue Service does not allow a capital allowance on the administration
building.
1.2 Delivery vehicles
On 1 January 2023 Ndlovu Jam Ltd purchased a new delivery vehicle for
R650 000. The delivery vehicle was available for use, as intended by management,
and brought into use on this date.
Ndlovu Jam Ltd sold a delivery vehicle for R550 000 at year end on
31 December 2023. The delivery vehicle was originally acquired on
1 January 2022 at a cost price of R500 000. The delivery vehicle was available for
use, as intended by management, and brought into use on this date. On the date
the delivery vehicle was sold, the accumulated depreciation amounted to
R200 000. Only the following journal entry was recorded for the sale of the delivery
vehicle in the accounting records of Ndlovu Jam Ltd for the year ended
31 December 2023:
Dr Cr
R R
Bank (SFP) 550 000
Sale of delivery vehicle (P/L) 550 000
Recording of sale of delivery vehicle
1
, FAC3701/101/1/2024
ASSESSMENT 01 (First semester) (continued)
The delivery vehicles are depreciated according to the straight-line method over
five (5) years with no residual value.
The SA Revenue Service allows a capital allowance over four (4) years (not pro-
rata) on the delivery vehicles.
No other delivery vehicles were acquired or sold during the year.
2. Trade receivables are as follows:
2022 2023
R R
Trade receivables 130 000 150 000
Allowance for credit losses (25 000) (35 000)
105 000 115 000
The SA Revenue Service allows 25% of the allowance for credit losses as a
deduction. Actual credit losses incurred are written off directly to the statement of
profit or loss and other comprehensive income and not against the allowance for
credit losses.
3. Profit before tax
Included in profit before tax are the following line-items:
2023
R
• Foreign income received from China. The foreign income is not 180 000
taxable in South Africa in terms of a double taxation agreement.
Ndlovu Jam Ltd paid foreign taxes of R27 000 on this income.
• Allowance for credit losses (refer 2) 10 000
• Sale of delivery vehicle (refer 1.2) 550 000
• Donation (not tax deductible) 13 000
• Depreciation – administration building 75 000
• Depreciation – delivery vehicles 230 000
• Insurance premium paid for the year 1 November 2023 to 84 000
31 October 2024.
4. Taxation
• The company provides for deferred tax on all temporary differences according
to the statement of financial position approach. There are no exempt or
temporary differences except those mentioned in the question. There is
certainty beyond any reasonable doubt that the company will have sufficient
taxable profit in future against which any deductible temporary differences can
be utilised.
• The deferred tax liability balance was R1 750 on 31 December 2022, which you
may assume to be correct.
2
, FAC3701/101/1/2024
ASSESSMENT 01 (First semester) (continued)
• The SA Normal tax rate changed from 28% in 2022 to 27% in 2023. The capital
gains tax inclusion rate is 80%.
• Ignore the implications of Value Added Tax (VAT).
• The following is an extract of the statement of financial position “SA Revenue
Service - current tax” general ledger account of Ndlovu Jam Ltd for the year
ended 31 December 2023:
SA Revenue Service - current tax
R
Debit R Credit
31/07/2023 Bank (1st 40 000 01/01/2023 Opening balance 20 000
provisional tax (relating to 2022
payment for tax assessment) b/d
2023, including
penalties for
late payment
of R2 000)
31/12/2023 Bank (2nd 52 000
provisional tax
payment for
2023)
28/02/2023 Bank (Final 23 000 31/12/2023 Closing balance c/d 95 000
payment for
2022 tax
assessment)
115 000 115 000
01/01/2024 Opening ba-
lance b/d 95 000
• The accountant of Ndlovu Jam Ltd has not yet made provision for current tax
in the financial statements of Ndlovu Jam Ltd for the year ended
31 December 2023.
• Ndlovu Jam Ltd agrees with the 2022 tax assessment issued by the SA
Revenue Service. The difference is due to expenses claimed by Ndlovu Jam
Ltd for the 2022 tax year which were not allowed by the SA Revenue Service.
5. Assume all amounts to be material.
3
, FAC3701/101/1/2024
ASSESSMENT 01 (First semester) (continued)
REQUIRED:
Marks
a) Using the additional information, calculate the correct profit before tax in the 4
statement of profit or loss and other comprehensive income of Ndlovu Jam Ltd
for the year ended 31 December 2023.
b) Calculate the deferred tax balance in the statement of financial position of 6½
Ndlovu Jam Ltd at ended 31 December 2023 using the statement of financial
position approach. Indicate if the balance is a deferred tax asset or deferred
tax liability. Your answer must comply with the requirements of IAS 12, Income
taxes.
c) Calculate the current tax due to the SA Revenue Service by Ndlovu Jam Ltd 8½
for the year ended 31 December 2023. Use the profit before tax calculated in
(a) as your starting amount.
Your answer must comply with the requirements of IAS 12, Income taxes. The
movement in temporary differences in the current tax calculation should
be calculated using the statement of financial position approach.
d) Prepare the necessary journal entries to correctly record the deferred tax and 3½
the current tax respectively, as calculated in (b) and (c) above, in the
accounting records of Ndlovu Jam Ltd for the year ended 31 December 2023.
Journal narrations are not required.
No abbreviations for general ledger account names in your journals may be
used.
Indicate in your journal if it is statement of financial Position (SFP) or statement
of profit or loss and other comprehensive income (P/L) general ledger
account.
e) Disclose the income tax expense note, excluding the tax rate reconciliation, in
the notes to the annual financial statements of Ndlovu Jam Ltd for the year 7½
ended 31 December 2023, according to the requirements of IAS 12, Income
taxes.
Comparative amounts are not required.
No accounting policy notes are required.
30
Please note:
Your answer must comply with the requirements of International Financial Reporting
Standards (IFRS).
All calculations must be shown.
All calculations are to be done to the nearest Rand.
Ref: / FAC3701_2024_TL_101_1_B.pdf
©
UNISA 2024
4
,
