CAS3701 CASE STUDY 4
SEMESTER 2 - 2023
UNIQUE NUMBER: 845060
DUE DATE: 29 SEPTEMBER 2023
, CASE STUDY 4
UNIQUE NUMBER: 845060
CLOSING DATE: 29 SEPTEMBER 2023
MARKS: 20
1. GOODWILL CALCULATION:
Please review the trainee’s calculation above and provide me with comments and
corrections (where necessary). Please do not re-perform the calculation.
Email 2 of 3:
Subject: Re: Solar Limited
Dear Lucas,
I hope this email finds you well. I have reviewed the trainee's calculation of goodwill at the
acquisition of Solar Ltd, and I would like to provide some comments and corrections as
follows:
Issue 1: Deferred Tax Rate Calculation
Issue: The deferred tax on the revaluation of land and inventory should be calculated
at 27%, not 28%. (The South African National Treasury announced on 23 February
2022 that the corporate tax rate is reduced from 28% to 27% for years of assessment
that end on or after 31 March 2023).
Explanation: The issue here is that the trainee used a tax rate of 28% for calculating
the deferred tax, while the correct rate should be 27% based on the announcement
by the South African National Treasury.
Recommendation for Improvement: To address this issue, the correct corporate tax
rate of 27% should be applied when calculating the deferred tax on the revaluation
of land and inventory. This ensures compliance with the updated tax rate and
accurate financial reporting.
1
SEMESTER 2 - 2023
UNIQUE NUMBER: 845060
DUE DATE: 29 SEPTEMBER 2023
, CASE STUDY 4
UNIQUE NUMBER: 845060
CLOSING DATE: 29 SEPTEMBER 2023
MARKS: 20
1. GOODWILL CALCULATION:
Please review the trainee’s calculation above and provide me with comments and
corrections (where necessary). Please do not re-perform the calculation.
Email 2 of 3:
Subject: Re: Solar Limited
Dear Lucas,
I hope this email finds you well. I have reviewed the trainee's calculation of goodwill at the
acquisition of Solar Ltd, and I would like to provide some comments and corrections as
follows:
Issue 1: Deferred Tax Rate Calculation
Issue: The deferred tax on the revaluation of land and inventory should be calculated
at 27%, not 28%. (The South African National Treasury announced on 23 February
2022 that the corporate tax rate is reduced from 28% to 27% for years of assessment
that end on or after 31 March 2023).
Explanation: The issue here is that the trainee used a tax rate of 28% for calculating
the deferred tax, while the correct rate should be 27% based on the announcement
by the South African National Treasury.
Recommendation for Improvement: To address this issue, the correct corporate tax
rate of 27% should be applied when calculating the deferred tax on the revaluation
of land and inventory. This ensures compliance with the updated tax rate and
accurate financial reporting.
1
