QUESTION $8\mathrm{.}5(36$ marks, $64$ minutes$)$

This is an integrated question, in which the taxable captal gain needs to be calculated in a taxable income calculation. In this question, the taxabie capital gain must be added to the taxable income calculation. If you get a question like this you must calculate the capital gains tax within the main answer $($as part of the calculations$)$ and then include the taxable capital gain amount in the final column of the taxable income caloulation.

You are a trainee accountamt and a member of the sudit team currenty performing the audit of Betty B $($Pty$)$ Ltd $($Betty B$).$ Betty B manutactures lipsticks at its factories. One of the tactories is the south of Johannesburg, and it manufactures and distributes Ippsticks locally. The other factory is situated in East London, and it manufactures and distributes lipsticks to overseas markets. The are conducted with registered VAT vendors, unless specifically stated otherwise. Where neces. sary. Betty $B$ obtained valid tax invoices and the required documentation for all its transactions.

The financial accountant at Betty B has almost completed the calculation of the taxable income for the year of assessment ending on the last day of December. She is unsure of how to treat some of the transactions that occurred during the year for taxation purposes. and she has asked you tie complete the taxable income caloulation, taking these transactions into account.

The taxable income she arrived at was R$2356000.$ Assume the calculation of this figure is correct $($in terms of the provisions of the Income Tax Act$).$

The transactions below have not been taken into accoumt in the proft before tax or the taxable income of R$2356000$: $($All amounts exclude VAT, uniess stated otherwise.$)$

Dividends

Betty $B$ received the following dividends during the year of assessment:

R$200000$ trom a South Arrican subsidiary compary of Betty B

R$60750$ from a Nigerian company $($Betty B does not own $10\%$ of the equity shares$).$ Betty B also paid out a dividend of R$7$B$0000$ to hts shareholders on $31$ December $2023$

Insurance premiums

Insurance premiums of R$245000$ were paid in full for the $12-$month period from $1$ August $2023$ to $31$ July $2024$

Fixed assets

$3\mathrm{.}1$ Machine Forex was purchased new from a supplier in Germany for $100000$ euros on $1$ October $2023.$ Freight and insurance costs of R$23000$ were paid. The machine was delivered on $31$ October $2023$ and was brought into use on $22$ December $2023.$ The purchase

QUESTION $8\mathrm{.}5($continued$)$

Assume the exchange rates $($spol$)$ were as follows

$1$ Oacoler $2023$ for the subsidiary was RBo $000$ and the current market value is R$95000)$ BGR$7$ gaccepts $30$ November $2023$ period for portable generators. Betty B sold the generator for R$200000o30$ November $2023,$ as it decided to purchase a more powerful generator the next year

$1\mathrm{.}3$ Machine Hotex is a second$-$hand wax$-$melting machine that was purchased and was broughi into use on $30$ October $2023.$ The purchase price was R$1$ malion. It cost Betty B anothe R$50000k$ install the machine in the factory. Machine Hotex $2$ was purchased to replact Machine Holext that had been destroyed in a fire earier in the year. Machine Hotext wat purchased new for R$850000$ in January $2022.$ It had a tax value of R$510000$ at the beginning of the ourrent year of assessment. On $1$ June $2023,$ Betty B received an insurance pay$-$out a R$402500($including VAT$)$ from the insurance company for the destroyed Machine Hotext. Betty B elected to apply paragraph $65$ of the Eighth Schedule.

$4.$ Trademark

On $30$ June $2023,$ one of the lipstick trademarks that Betty $8$ had registered in $2020$ was renewed for a further three years at a cost of R$75000.$

$5.$ Design

On $31$ May $2023,$ Betty B purchased a spectic design to be used for their lipstick winter range from Levron Cosmetics for R$120000$

$6.$ Advertising

An extensive advertising campaign was launched to promote Betty B$\text{'}$s summer lipatick range. The campaign included a biboard positioned near a shopping centre in Johannesburg and campaign was R$450000.$ Assume no enduring benefi was created

$7.$ Disposal of the East London factory

Betty B decided to move all operations to Johannesburg and therefore disposed of its Easi London factory. On $31$ January $2024,$ the factory the valuaton date value of the factory is $R2$ milion.

QUESTION $8\mathrm{.}5($continued$)$

$6$

Betty $8$ purchased the tactory for R$750000$ on $1$ Jaruary $2001.$ During May $2013,$ the factory was expanded. The expansion costs amounted and was brought into use on $1$ November $2013.$

The tax value of the factory at the date of disposal is calculated as folows:

$\backslash$table$[[,\backslash$table$[[$Original factory$],[R$