QUESTION 1 (continued) 7. 7.1. 7.2. 7.3. 7.4. 7.5. 7.5 7.6 7.7 expenses instead of accounts receivable (debtor). The SA Revenue Services indicated that they will reopen the tax assessment for the nancial year ended 31 December 2020. The accounts payable balance in the above trial balance consists only of unearned sales revenue received in advance for lay away sales of goods which will be delivered in January 2022 when the buyer makes the nal payment. The accounts payable at the end of the previous nancial year amounted to Rnil. The sales revenue received in advance is included in gross income for tax purposes. On 20 December 2020 the board of directors of Roger Ltd declared and approved ordinary dividends to its shareholders. The dividend tax due amounted to R168 164. The dividends and dividend tax were correctly recorded in the accounting records of Roger Ltd for the nancial year ended 31 December 2020. All the shareholders of Roger Ltd are natural persons. The dividends and dividends tax were paid on 10 January 2021. These payments have not been recorded yet in the accounting records of Roger Ltd for the year ended 31 December 2021. The following items are also included in the abovementioned prot before tax: VAT penalties paid of R12 000. Donations of R120 000 paid. of which R30 000 are not allowed for tax purposes. R11 000 employees tax (PAYE) paid during the month of December 2021 in respect of salaries and wages for November 2021. Foreign income amounting to R220 000 which is not taxable in South Africa in terms of a double taxation agreement. The company paid foreign taxes of R30 000 on this income. 1 Depreciation delivery vehicles R53 437. .2 Depreciation Minibus R160 000. Dividends received in respect of listed investments and unlisted investments in South Africa amounting to R190 000. Prot on Minibus destroyed in car accident amounting to R290 000. The company provides for deferred tax on all temporary differences using the statement of nancial position approach. There is certainty beyond any reasonable doubt that the company will have sufcient taxable profit in future against which any unused tax losses can be utilized. There are no other temporary differences except those mentioned in the question. The SA Normal tax rate changed from 29% in 2020 to 28% in 2021. The dividend tax rate is 20%. All capital gains are taxable at 80%. QUESTION 1 (53 marks)(95 minutes) Roger Ltd is a manufacturer of various types of washing machines and dishwashers. The following is an extract of Roger Ltd trial balance for the year ended 31 December 2021: Notes Debit Credit R R Minibus at cost 1 1 600 000 Accumulated depreciation: Minibus 1 160 000 Delivery vehicles at cost 2 380 000 Accumulated depreciation: Delivery vehicles 2 219 68? Accounts receivable 4 30 000 5 7 Accounts payable Prot before tax 40 000 1 450 000 The prot before tax in the above trial balance includes all the below mentioned additional information, except where otherwise stated. Additional information 1. On 1 January 2021 a Minibus with an original cost of R1 200 000, was involved in a car accident and was damaged beyond repair. A claim was lodged with the company's insurers and the company received proceeds of R1 250 000. The carrying amount and tax base of the Minibus on the day of the accident amounted to R960 000 and R900 000 respectively. On 30 June 2021 the company purchased a new Minibus for R1 600 000 to replace the abovementioned Minibus. The tax base of the new Minibus on 31 December 2021 amounted to R1 400 000. 2. The delivery vehicles were acquired on 1 January 2019 at a cost of R380 000. Delivery vehicles are depreciated according to the reducing balance method at 25% per annum. However, after a review of the draft nancial statements for the year ended 31 December 2021 the directors' decided to change the depreciation method to the straight-line method. The expected useful lives of the delivery vehicles on 31 December 2021 was estimated to be 2 years with a residual value of Rnil. The change in the method of depreciation in the accounting records of Roger Ltd have not been recorded as yet for the nancial year ended 31 December 2021. The tax base of the delivery vehicles at 31 December 2020 and 31 December 2021 amounted to R190 000 and R95 000 respectively. 3. On 31 December 2021 Roger Ltd sold six laundry machines each including a two-year service plan for a total amount of R102 600 cash. A customer can acquire a laundry machine without a two-year service plan for R15 390 each. Roger Ltd also regularly sells a two-year service plan to customers at a stand-alone selling price of R2 500 each. This sales transaction has not been recorded in the accounting records of Roger Ltd for the year ended 31 December 2021. 4. The accounts receivable balance in the above trial balance consists only of rent paid in advance for the property that Roger Ltd currently occupies. The rent paid in advance relates to the rental for January 2022 which was already paid in December 2021. The accounts receivable balance at the end of the previous nancial year amounted to Rnil. Included in prot before tax forthe year ended 31 December 2020 is an amount of R100 000 which was incorrectly accounted for as maintenance REQUIRED (continued): Disclose information (2) and (4) above in the notes to the annual nancial statements of Roger Ltd for the year ended 31 December 2021 according to the requirements of only {AS 8, Accounting policies, changes in accounting estimates and errors. No accounting policy notes are required. Comparative gures are required Please note: Your answer must comply with the requirements of International Financial Reporting Standards (IFRS). All calculations must be shown. Calculations are to be done to the nearest Rand. [53] QUESTION 1 (continued) REQUIRED: (a) (b) (C) (d) (e) (0 Marks With reference to the sale of the laundry machines mentioned in additional information 3 (3) above. list three methods Roger Ltd can adopt to estimate the stand-alone prices of the laundry machines and service plan. Assume the stand-alone prices was not available to Roger Ltd on 31 December 2021. Your answer must comply with the requirements of iFRS 15, Revenue from contracts with customers. Prepare the necessary journal entry to correctly record the transaction in additional 4 information (6) in the accounting records of Roger Ltd for the year ended 31 December 2021. Your answer must comply with the requirements of internationai Financial Reporting Standards (iFRS). Journal narrations are not required. No abbreviations for general ledger count names may be used. Indicate in yourjournals if it is a statement of nancial position (SFP) or statement of prot or loss and other comprehensive income (PIL) general ledger account. Calculate the correct profit before tax in the statement of prot or loss and other 8 comprehensive income of Roger Ltd forthe year ended 31 December 2021. taking into account all the above-mentioned information. Your answer must comply with the requirements of International Financial Reporting Standards (IFRS). Calculate the deferred tax balance in the statement of nancial position of Roger Ltd 101/: for both the years ended 31 December 2020 and 31 December 2021. using the statement of nancial position approach, according to the requirements of #18 12. income taxes. Indicate if the balances are a deferred tax asset or liability in the statement of nancial position. Using your answers in (c) and (d) above. calculate the current tax expense in the 6% statement of prot or loss and other comprehensive income of Roger Ltd for the year ended 31 December 2021. Your answer must comply with the requirements of MS 12, income taxes. The movement in temporary differences in the current tax calculation should be calculated using the statement of financial position approach. Disclose only the income tax expense note (including the tax rate reconciliation, using 11 Rvalues), to the annual nancial statements of Roger Ltd for the year ended 31 December 2021. Your answer must comply with the requirements of #1812. income taxes. No accounting policy notes are required. Comparative gures are not required