Super Ltd acquired a plant for R1 000 000 on 1 January 2020. The plant has...

 

Transcribed Image Text:

Super Ltd acquired a plant for R1 000 000 on 1 January 2020. The plant has a useful life of 4 years and is assessed as having a zero residual value. Depreciation is provided on the straight-line method. Super Ltd has a legal obligation to dismantle the plant at the end of 4 years. • The estimated future costs of dismantling the plant at 31 December 2023 are R40 000. • The present value (at 1 January 2020) of the future dismantling costs is R27 321 (using a discount rate of 10%). The company uses the cost model to account for property, plant and equipment. Required: Prepare the journal entries (ignoring the effects of taxation) relating to the above-mentioned information for 2020 and 2021 assuming that on 1 January 2021: • Dismantling costs are expected to increase to R60 000 (PV at 1 January 2021 R45 079) QUESTION 2 (10 Marks) Vhembe Limited manufactures and sells lawnmowers online to the public. The company produced a profit before tax of R3 800 000 for the year ended 28 February 2021. Included in the profit before tax are the following items: Dividend income of R200 000 which is exempt from income tax Donations of R100 000 which is non-deductible The income tax rate for the financial year is 30% and there was no temporary difference observed. Required: Calculate current income tax for the year ended 28 February 2021. Super Ltd acquired a plant for R1 000 000 on 1 January 2020. The plant has a useful life of 4 years and is assessed as having a zero residual value. Depreciation is provided on the straight-line method. Super Ltd has a legal obligation to dismantle the plant at the end of 4 years. • The estimated future costs of dismantling the plant at 31 December 2023 are R40 000. • The present value (at 1 January 2020) of the future dismantling costs is R27 321 (using a discount rate of 10%). The company uses the cost model to account for property, plant and equipment. Required: Prepare the journal entries (ignoring the effects of taxation) relating to the above-mentioned information for 2020 and 2021 assuming that on 1 January 2021: • Dismantling costs are expected to increase to R60 000 (PV at 1 January 2021 R45 079) QUESTION 2 (10 Marks) Vhembe Limited manufactures and sells lawnmowers online to the public. The company produced a profit before tax of R3 800 000 for the year ended 28 February 2021. Included in the profit before tax are the following items: Dividend income of R200 000 which is exempt from income tax Donations of R100 000 which is non-deductible The income tax rate for the financial year is 30% and there was no temporary difference observed. Required: Calculate current income tax for the year ended 28 February 2021.

Answer rating: 100% (QA)

Answer q1 q2 Date ccount Dr Cr Property plant and equipment PPE 202001... View the full answer