Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

2021_REK31CB_W (Financial Accounting III (1)) Introduction STUDY GUIDE Assignments and Solutions Revenue UNIT 1 Deferred Tax Unit 2 Change in Accounting Policies, Estimates and Errors

2021_REK31CB_W (Financial Accounting III (1))

Introduction

STUDY GUIDE

Assignments and Solutions

Revenue UNIT 1

Deferred Tax Unit 2

Change in Accounting Policies, Estimates and Errors Unit 3

Online Term Mark Tests

Tools

Help

Connectyard

Take Test: 2021 REK 31 TEST 3

Test Information

DescriptionInstructions

USE THE TABLE ABOVE TO ANSWER QUESTIONS WHEN INSTUCTED TO USE TABLE A

TABLE A

You have total of 15 questions of which 9 are based on the information provided below.

Machine Z was purchased on 1 November 2018 for R6 000 000.This machine was depreciated over 5 years using the straight-line method with a residual value of R3 000 000, instead a zero residual value.

After discussions with the auditors, a conclusion was arrived that this material error had occurred in the annual financial statements. A correction of error was required in the current year, using a zero residual value.

The company tax rate was 28 % for current year and the past two years.

The following are extracts of the statement of financial position of ABC Ltd for the years ending 31 December, before any adjustments have been made for the correction of error:

2020

2019

2018

R

R

R

Assets

Property, Plant and Equipment

5340000

6100000

6900000

Equity

Retained Income

2 600 200

2 400 900

2 100 300

Use the correct signs for the "Difference in Income" row calculation: for example 10- 2 = + 8 or 6 - 8 = - 2

Complete the workings the table below before you commence answering the 9 questions.

Workings Calculations

2020

2019

2018

R

R

R

Add (plus) correct calculation of depreciation

Less (minus) incorrect calculation of depreciation

Difference on Income : - increase /+ decrease

Deferred Tax Expense :+ increase /- decrease

Income after tax: - increase/ + decrease

Calculate the correct disclosure amounts of the correction of error note below

ABC LTD Notes to the annual financial statements (extracts)

For the year ended 31 December 2020.

(Use the information provided in Table A)

Effect on the statement of comprehensive income

2019

R

Depreciation: + increase /-decrease

A

Income tax deferred expense: + increase/- decrease

B

Profit for the year: - Increase / + decrease

C

Effect on statement of financial position

2019

2018

R

R

Property, plant and equipment: + increase/- decrease

D

E

Deferred tax liability: - increase/ + decrease

F

G

Retained earnings: -increase/+ decrease

H

I

Calculate the correct amount for "F" in the above correction of error note.

Use: - increase/ + decrease in Deferred Tax Liability

Select your correct answer from the options below:

I.

+100 000

II.

-168 000

III.

None of the answers are correct

IV.

+196 000

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Internal Auditing Handbook

Authors: K. H. Spencer Pickett

3rd Edition

0470518715, 978-0470518717

More Books

Students also viewed these Accounting questions

Question

2. Develop a persuasive topic and thesis

Answered: 1 week ago

Question

1. Define the goals of persuasive speaking

Answered: 1 week ago