Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

a) Mint Ltd acquired a building on 1 January 2018 for 400,000. The depreciation policy for Mint Ltd for buildings is the straight-line method with

image text in transcribed
a) Mint Ltd acquired a building on 1 January 2018 for 400,000. The depreciation policy for Mint Ltd for buildings is the straight-line method with a rate of 10% per annum, with no residual. The useful economic life of the building remains unchanged as at the end of 2021. The valuations of the building are given as follows: Date Valuations 31 Dec 2018 500,000 31 Dec 2019 650,000 31 Dec 2020 1,000,000 31 Dec 2021 1,000,000 Required: Show how the building would have been accounted for using the fair value method in the financial statements of Mint from 2018 to 2021. Mint revalues its assets every year. Show how the building would have been accounted for in the financial statements of Mint Ltd from 2018 to 2021 using the cost method and with Mint choosing to revalue the building on 1 January 2021 for the first time. (7 marks) b) Primrose Ltd.'s year end is 31 December 2021. On 5 January 2022, an accidental fire destroyed the factory completely. The loss to the company from the fire is 900,000, which is deemed material for the company. Required: What are events after the reporting period"? How should Primrose Ltd. account for the fire? Your answer to this part of the question should not be more than 90 words. (3 marks) c) Wrexham Ltd. purchased a machine for 50,000 on 1 January 2019. The machine has a useful economic life of three years, with a scrap value of 5,000. The company's policy is to depreciate non-current assets on a straight-line basis. The company also expects to make profits of 42,000 every year from 2019 to 2022. The corporation tax rate for all years is 20%. The capital allowance on non-current assets for tax purposes for 2019 is 19,500, for 2020 is 13,500, and for 2021 is 12,000. The company has a 31 December year-end. Required: Calculate (ignore the time value of money): 1) The deferred tax charge for all three years; ii) The provision for deferred tax that should be recorded in the Statement of Financial Position for each year. (6 marks) iii) Briefly compare the advantages and limitations of deferred tax. Your answer to this part of the question should not be more than 120 words

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

Step: 3

blur-text-image

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

Audit Workbook

Authors: Azhar Ul Haque Sario

1st Edition

B0C9SG1YC6, 979-8851207891

More Books

Students also viewed these Accounting questions

Question

1) for (i1; i S (n-1);) for (j = 2; J

Answered: 1 week ago

Question

Describe employee assistance programs.

Answered: 1 week ago

Question

Describe the importance of physical fitness programs.

Answered: 1 week ago

Question

Discuss the factors that set the stage for global HR practice.

Answered: 1 week ago