Philippa is a doctor. Last year, Philippa decided to quit her job with Big Hospital and commence a business as a sole practitioner based at her home. Philippa commenced her business on 1 July this year.

Philippa tells you:

• On 1 Feb this year, she paid $1,500 to register as a private doctor as required by law.
• On 3 March this year, she paid $3,000 legal costs in defending herself against an allegation she had breached Big Hospital patient privacy rules in posting selfies to her social media accounts while she was at work.

Required: 

Advise Philippa on the deductibility of these expenses. Your advice must include reference to all relevant legislation, cases and/or rulings 

Transcribed Image Text:

Vision and Audio is a small owner-managed business that specializes in the installation of television and audio equipment for customers with high-end home theatre systems. The company has provided the following data concerning its most recent month of operations: Budgeted Variable Budgeted Fixed Component per Month Component Actuals for October $52, 250 16,900 2,804 (1,304 fixed) 5,416 (5,112 fixed) 3,300 300 per Installation $550 Revenue Installer wages Selling and administrative expenses $17, 200 1,225 15 office expenses 5,400 3,160 300 Marketing expenses Insurance 550 709 Miscellaneous expenses (538 fixed) The company uses the number of installations as its measure of activity. For example, selling and administrative expenses should be $1,225 plus $15 per job, and the actual selling and administrative expenses for October were $2,804. The company expected to do 100 installations in October, but actually did 95. Required: Prepare a comprehensive performance report for October. Assume that the static budget for October was based on an activity level of 100 jobs. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Answer is not complete. Vision and Audio Comprehensive Performance Report For the Month Ended October 31 Flexible Flexible Budget Sales Volume Variance Static Actual Budget Variance Budget Jobs 95 95 100 Answer is not complete. Vision and Audio Comprehensive Performance Report For the Month Ended October 31 Flexible Budget Variance Sales Flexible Budget Static Budget Actual Volume Variance Jobs 95 95 100 Revenue $ 52,250 O 0O None $ 52,250 2,750 O U 55.000 Variable Expenses: 16,900 0 2,804 O 5,416 O 300 8 F 154 O U 269 O F O 17,200 O 2,650 O 5,685 O 08 None O 17,200 O 2,725 8 5,700 O Installer wages Selling and administrative expenses 75 O F 15 O F 0O None 8 0O None Office expenses 3,160 O 300 140 O U 3,160 O 3,300 O 300 Marketing expenses None 300 Insurance Total variable expenses 25,120 306 O F 25,535 100 OF 25,625 Office expenses 5,416 0 3,300 269 F 5,685 3 15 5,700 3 Marketing expenses 140 U 3,160 8 0O None 3,160 0 Insurance 300 O 0O None 306 O F 300 0O None 300 Total variable expenses O 25,625 O 29,375 25,120 25,535 100 Contribution margin 27,130 306 O U 26,715 2,850 Less fixed expenses: Total fixed expenses $ 27,130 $ 26,715 29,375 Vision and Audio is a small owner-managed business that specializes in the installation of television and audio equipment for customers with high-end home theatre systems. The company has provided the following data concerning its most recent month of operations: Budgeted Variable Budgeted Fixed Component per Month Component Actuals for October $52, 250 16,900 2,804 (1,304 fixed) 5,416 (5,112 fixed) 3,300 300 per Installation $550 Revenue Installer wages Selling and administrative expenses $17, 200 1,225 15 office expenses 5,400 3,160 300 Marketing expenses Insurance 550 709 Miscellaneous expenses (538 fixed) The company uses the number of installations as its measure of activity. For example, selling and administrative expenses should be $1,225 plus $15 per job, and the actual selling and administrative expenses for October were $2,804. The company expected to do 100 installations in October, but actually did 95. Required: Prepare a comprehensive performance report for October. Assume that the static budget for October was based on an activity level of 100 jobs. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Answer is not complete. Vision and Audio Comprehensive Performance Report For the Month Ended October 31 Flexible Flexible Budget Sales Volume Variance Static Actual Budget Variance Budget Jobs 95 95 100 Answer is not complete. Vision and Audio Comprehensive Performance Report For the Month Ended October 31 Flexible Budget Variance Sales Flexible Budget Static Budget Actual Volume Variance Jobs 95 95 100 Revenue $ 52,250 O 0O None $ 52,250 2,750 O U 55.000 Variable Expenses: 16,900 0 2,804 O 5,416 O 300 8 F 154 O U 269 O F O 17,200 O 2,650 O 5,685 O 08 None O 17,200 O 2,725 8 5,700 O Installer wages Selling and administrative expenses 75 O F 15 O F 0O None 8 0O None Office expenses 3,160 O 300 140 O U 3,160 O 3,300 O 300 Marketing expenses None 300 Insurance Total variable expenses 25,120 306 O F 25,535 100 OF 25,625 Office expenses 5,416 0 3,300 269 F 5,685 3 15 5,700 3 Marketing expenses 140 U 3,160 8 0O None 3,160 0 Insurance 300 O 0O None 306 O F 300 0O None 300 Total variable expenses O 25,625 O 29,375 25,120 25,535 100 Contribution margin 27,130 306 O U 26,715 2,850 Less fixed expenses: Total fixed expenses $ 27,130 $ 26,715 29,375

Answer rating: 100% (QA)

Answer The expenses incurred by Philippa in registering as a nonpublic doctor And in defensive herse... View the full answer