Question
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
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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
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