FAC3701 Assignment 01 Semester 01 2024( QUALITY ANSWERS) DISTINCTION GUARANTEED

FAC3701 ASSIGNMENT 1 - 2024

(a) Profit before tax calculation
Given 962,000
Profit on sale of delivery vehicle (550 000 - (500 000 - 200 000)) 250,000
Reversal of proceeds on sale of vehicle credited to profit or loss (550,000)
Profit before tax 662,000



(b)
Carrying
amount




Administration building (1 500 000 - 150 000) 1,350,000
Delivery vehicles 520,000 C1
Allowance for credit losses (35,000)
Prepaid insurance (84 000 x 12/12) 70,000

Deferred tax liability on 31 December 2023

c) Current tax calculation
Profit before tax 662,000
Exempt differences:
Foreign income (180,000)
Donation 13,000
Depreciation - administration building 75,000
Non-taxable portion of capital profit on sale of delivery vehicle (550 000 - 500
000) x 20% (10,000)
Profit after exempt differences 560,000

Movement in temporary differences (560 000 - 1 750/28%) (553,750)

Taxable income 6,250

Current tax (6 250 x 27%) 1,688

d) Journals
DR
Income tax expense - Current tax (P/L) 1,688
SARS - Current tax (SFP)

Income tax expense - deferred tax (P/L) 18,838