The following information relates to Lavant Limited, a chemical manufacturer, which commenced operations on 1 January...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
The following information relates to Lavant Limited, a chemical manufacturer, which commenced operations on 1 January 2018. 1. Plant purchases and sales were as follows: Sales Sold 31 December 2020 for R350 000. Plant costing R100 000 was sold on 31 December 2020 for R70 000. Date Cost 1/1/2018 R300 000 R400 000 30/6/2019 1/1/2020 R800 000 2. The company traded profitably in 2018. In 2019 although the company reported a profit before tax of R30 000, the 2019 yearend tax computation showed a tax loss of R70 000 to be carried forward to 2020. 3. Depreciation is calculated at 10% per annum straight line whereas the South African Revenue Services allows Lavant Limited to claim a S12C allowance on its plant of 20% per annum. 4. The company's accounting profit was R950 000 for the year ending 31 December 2020 before depreciation and dividends received and before any other adjustments in respect of the above items. 5. The company provides for deferred tax on all temporary differences and tax losses. 6. Assume taxation was levied at the following rates: Year ended Normal tax 31/12/2018 30% 31/12/2019 30% 31/12/2020 28% Assume that capital gains tax has always been in effect in South Africa at an inclusion rate of 60% of the capital gain. 7. There are no other sources of differences between accounting profit and tax profit other than those apparent from the information. 8. Dividends received and paid by the company for the last 3 years were as follows: 20.6 20.5 20.4 Dividends received 10 000 10 000 10 000 Dividends paid - 30 November 50 000 An amount of dividend withholding tax of R7 500 was paid to SARS on 31 December 2020. You are required to: 1. Calculate the current tax expense of Lavant Limited for the year ended 31 December 2020 Start your tax computation with the profit before tax figure. 2. Calculate the deferred tax expense of Lavant Limited for the year ended 31 December 2020 by comparing the relevant carrying amounts and tax bases. 3. Draft the taxation notes (including accounting policies note) to the financial statements (Statement of profit or loss and other comprehensive income and statement of financial position) in compliance with IAS 12 Income Taxes. The following information relates to Lavant Limited, a chemical manufacturer, which commenced operations on 1 January 2018. 1. Plant purchases and sales were as follows: Sales Sold 31 December 2020 for R350 000. Plant costing R100 000 was sold on 31 December 2020 for R70 000. Date Cost 1/1/2018 R300 000 R400 000 30/6/2019 1/1/2020 R800 000 2. The company traded profitably in 2018. In 2019 although the company reported a profit before tax of R30 000, the 2019 yearend tax computation showed a tax loss of R70 000 to be carried forward to 2020. 3. Depreciation is calculated at 10% per annum straight line whereas the South African Revenue Services allows Lavant Limited to claim a S12C allowance on its plant of 20% per annum. 4. The company's accounting profit was R950 000 for the year ending 31 December 2020 before depreciation and dividends received and before any other adjustments in respect of the above items. 5. The company provides for deferred tax on all temporary differences and tax losses. 6. Assume taxation was levied at the following rates: Year ended Normal tax 31/12/2018 30% 31/12/2019 30% 31/12/2020 28% Assume that capital gains tax has always been in effect in South Africa at an inclusion rate of 60% of the capital gain. 7. There are no other sources of differences between accounting profit and tax profit other than those apparent from the information. 8. Dividends received and paid by the company for the last 3 years were as follows: 20.6 20.5 20.4 Dividends received 10 000 10 000 10 000 Dividends paid - 30 November 50 000 An amount of dividend withholding tax of R7 500 was paid to SARS on 31 December 2020. You are required to: 1. Calculate the current tax expense of Lavant Limited for the year ended 31 December 2020 Start your tax computation with the profit before tax figure. 2. Calculate the deferred tax expense of Lavant Limited for the year ended 31 December 2020 by comparing the relevant carrying amounts and tax bases. 3. Draft the taxation notes (including accounting policies note) to the financial statements (Statement of profit or loss and other comprehensive income and statement of financial position) in compliance with IAS 12 Income Taxes.
Expert Answer:
Answer rating: 100% (QA)
1 Calculation of Current Tax Expense for the year ended 31 December 2020 Profit before tax R950000 Add Dividends received R30000 Less Dividends paid R50000 Profit before tax and dividends R930000 Calc... View the full answer
Related Book For
Advanced Financial Accounting
ISBN: 978-0137030385
6th edition
Authors: Thomas Beechy, Umashanker Trivedi, Kenneth MacAulay
Posted Date:
Students also viewed these accounting questions
-
Bytes (Pty) Ltd (Bytes or the company is a manufacturer of laptops. Bytes is a resident of the Republic and is not considered to be a small business corporation. The company has a February financial...
-
The following information relates to Pearline Corporation's transactions during 2014, its first year of operations. 1. Income before income tax on the income statement for 2014 was $110,000. 2. In...
-
Old Office Building Karas Investments owns a small office building in Windhoek, from which the company operates. The Windhoek office was purchased on 1 March 2019. Karas Investments decided to move...
-
A clinical study is established to determine if the results of a screening stress test can be used as a predictor of the presence of heart disease. The study enrolls 100 participants who undergo a...
-
Is the magnetic field created by a current loop uniform? Explain.
-
A disk rotates about its central axis starting from rest and accelerates with constant angular acceleration. At one time it is rotating at 10 rev/s; 60 revolutions later, its angular speed is 15...
-
Prepare a simple statement of financial position and interpret the information that it contains.
-
Using the information for Sarot, Inc., in SE 4 and SE 5 compute the profit margin, asset turnover, return on assets, and return on equity for 2011 and 2012. In 2010, total assets were $400,000 and...
-
For each of the classroom support techniques listed below, provide an example of how you would use this during a classroom lesson. a. Demonstrating skills b. Individual instruction c. Modifying...
-
George and Harry Haygood are building contractors who specialize in the construction of private home dwellings, storage warehouses, and small businesses (less than 20,000 sq. ft. of floor space)....
-
A New York-based online concert-ticket seller, Songkick, has helped major artists sell passes directly to fans so as to avoid scalpers. The company recently filed a lawsuit against Ticketmaster and...
-
Describe the debate over the source of the return differential between value and glamour stocks.
-
How do computational fluid dynamics (CFD) and process simulation tools complement each other in the design and optimization of chemical processing equipment ?
-
Carnes Cosmetics Co s stock price is $ 5 3 , and it recently paid a $ 2 . 2 5 dividend. This dividend is expected to grow by 1 7 % for the next 3 years, then grow forever at a constant rate, g; and...
-
A CDO of $ 1 0 0 million notional value with five year maturity has the following structure respectively: Tranche, Size ( million ) , Spread ( bps ) , O / C target, I / C target A 6 0 1 0 0 1 . 3 5 1...
-
If you purchase $ 1 0 0 , 0 0 0 of office furniture, how much can you deduct from your taxes by depreciating the furniture over 7 years using both the straight line and double declining balance...
-
The following method is intended to remove all alements of an ArrayList of integers that are divisible by key and add the removed elements to a new ArrayList, which it then returns. As an example, If...
-
An access route is being constructed across a field (Figure Q8). Apart from a relatively firm strip of ground alongside the field's longer side AB, the ground is generally marshy. The route can...
-
You have been hired to prepare a report for the board of directors of a large art gallery. The board has just reviewed the annual financial statements of the art gallery, and is dissatisfied with the...
-
How does the adjustment differ when there is a sale of an intangible asset; e. g., patent with limited life instead of a capital asset from the subsidiary to the parent?
-
On January 1, 20X4, Parent Ltd. purchased 90% of the shares of Sub Ltd. for $ 975,000. At that time Sub Ltd. had the following SFP: Sub Ltd. Statement of Financial Position January 1, 20X4 The bonds...
-
Solve Example 6.20, where \(k_{1}=3 \mathrm{~N}-\mathrm{m} / \mathrm{rad}, k_{2}=\) \(10 \mathrm{~N}-\mathrm{m} / \mathrm{rad}, I_{1}=5 \mathrm{~kg}-\mathrm{m}^{2} / \mathrm{rad}, I_{2}=2 I_{1}\),...
-
For Example 6.21, show the steps in the derivation of the three modes of vibration. Example 6.21 Unrestrained Translation Solve the three degree-of-freedom unrestrained transla- tional system shown...
-
In Example 6.21, show how Equation 6.137 arises. (-) () = 0, (6.137)
Study smarter with the SolutionInn App