QUESTION $74(35$ marks, $63$ minutes$)$Sepabai $($Pty$)$ Lid $($Sepabalr$)$ manufactures electronic toys for the local and export market inDurban, South Africa. The company's manutacturing process has been approved by SARS as a$9$ Pea manscure. Ihe companyis a small business corporation as d$$efined inThe company is registered as a Category A value$-$added tax $($VAT$)$ vendor, making only taxabiesupplies All transactions are conducted with registered VAT vendors unless specifically statede ecessay. Sepabal cotained valid tax invoices and the required taxationThe company's financial year ends on the last day of Marchpa aaya ubises any possible elecion$($s$)$ that woid legaly minimise ts overal tax liabiliYou are a tax manager at a fim of tax consutants, and you are required to assist Sepabal in speafictax matters and to provide tax advice where necessary.The assistant tax manager of Sepabal provided you with a list of transactions that he is having aexclude VAT, unless otherwise stated$)$:$1.$ Transaction one $(11$ marks$)$The directors of the company passed a resolutionto start manutacturing rechargeableelectronic toys, without the need for batteies The company placed an oder for the newToal Salutions is nat a connected person in relation to Sebapall The purchase prce exdudedof R$1250$o$,$ On the date of placing the order Sepabalalso paid a degosit of $50001$OWardsbalance was settled on $31$ January $2024.$The fallowing ruling exchange rates applied flor Sepabal's $2024$ year of assessment:Date$1$ June $202315$ December $2023$I April $2023-31$ MarchQUESTION Z$4($continued$)2.$ Transaction two $(11$ marks$)$company:The assistant tax manager calculated the depreciation for the $2024$ year of assessmernt asOn $1$ May $2021$ Sepabali purchased a second$-$hand devery vehicie to the value ofR$78000($including VAT$)$ and the vehicle was brought into use on the same date.$$ Delivery vehicieTExchangSpot$1-$R$16\mathrm{.}54$On $30$ July $2023$ the company purchased part of a new office block from a developer at acost o K s$000,$ to be used for the purposesof trade The offices were brought intoElectronic office equipment to the value of R$65000$ was purchased new on $1$ August $2023$to be used for administrative purposes as part of its trade$$ Electronic office equipment$3.$ Transaction three $(5$ marks$)$Binding General Ruling No$.7$ allows for the following wrte olf periods tor assets $($where applicable$)10$rate Average rateromSepabali does not apply IFRS $9$ for financial reporting purposes. The debtors clerk indicated$1-$ R$16\mathrm{.}32$that the list of doubtful debts at the $2024$ yea$-$end aouao$2023$: R$679900$ x $409\%-$ R$27196035\%$ of the list was in arrears for $40$ days The list of doubeui debis as an the $2020$ year$-$endhan $120$ davs ae oe he oa doubtu debes had been in arrears tor more$2024$: RS$78000$ x$40\%$ R$3912004.$ Transaction four $(8$ marks$)$The assistant tax manager calcuated the doubttul debt allowance $($and deducted the ountsn the taxable income$)$ for both the $2023$ and $2024$ years of assessment as folowsQUESTION $74($continued$)4$ years$3$ yearsSepabali incurred the following expenditure during its $2024$ year of assessment:REQUIRED:$1$ December $2023-$ Electricity for the period $1/1220231$o $3011/20241$December $2023-$Insurance premium for the period $1/1120231011$Raw material purchased during he current year of assessment$($Some of these raw materials were still on hand by $31$ March $2024$ andea in te anuactuning process during the $2025$ year ofR$145000$R$132000($Ony reates to services rendered to the empiloyer up to $31$t March $2024)$ R$467$ B$00$Expenses incurred in registering a trademark for the rechargeabieelectronic toysDiscuss, with supporting calculations, the incomeR$567000$Discuss, with supporting calculations, the income tax consequences forSepabal $($Pty$)$ LId in respect of the new machinery purchased lor theDiscuss, with supporting calculations, the income tax consequences toSepabal $($Py Ld in respect of the asets held by he company during itselection$($s$)$ that would legally minimise its ncome tax liabilty, specilicallyregarding capital allowances.Discuss and advise, with supporting caiculations whether or not te doubluldebt allowance amounts have been cornecty calculated by the assistant taxmanager or Sepabali $($Py$)$ Ltd for its $2024$ year of assessmentSeoabal $($P LId in resoect ot $$e espendihure incured by the comoany torts $2024$ year of assessmentR $70000$MARKS$1111$