Casio Ltd is a wholesaler and retailer of stationery and other related products. The company

supplies stationery stores and public schools throughout Gauteng and Mpumalanga. With the

recent issues in the Limpopo province, the board of directors has decided to expand the

operations and supply all the schools in that province. The financial director, Mr$.$ Pentel, has

been advised by the bank that a complete set of financial statements are required with the

application for a long term loan.

Mr$.$ Pentel is required to attend urgent business in Cape Town and has enlisted your

assistance in preparing some of the financial information while he is away. He has provided

the following information for the financial year ended $30$ June $2024$:

Income

$$ The revenue for the year comprised of sales of R$23720420.$ The mark up on cost of goods

is constant at $20\%.$

$$ Other income comprises of the following items:

R

Interest on debentures

$($Casio Ltd holds $3500$ R$12015\%$ debentures$)$

$37500$

Royaltiesreceived during $2024$

$($The royalty agreement statesthat R$22000$ is due every month$)$

$220000$

Royalties received in advance $1$ July $202366000$

$$ Casio Ltd has a $20\%$ share in Sharpie Limited which is listed on the Johannesburg Stock

Exchange. Sharpie Limited paid an interim dividend of R$120000$ on $29$ December $2021$ to

the shareholders and declared a final dividend of R$300000$ on $27$ June $2024.$

$$ The sales agent in Mpumalanga sold $20000$ school stationery packs at R$132$ each by $30$

June $2013.$ The agreement with Casio Ltd was that the sales agent will receive a

commission of $15\%$ for each of the stationery packs sold. This information was only

received on $4$ July $2024$ and had not yet been accounted for in the financial records.

Expenses

$$ The operating expenses for the year were R$1114000$ and included the following:

R

Finance costs $286000$

Insurance expenses paid for July and August $202472000$

Insurance expenses paid in advance $1$ July $202332000$

Donations $($R$40000$ is not tax deductible$)130000$

Furniture and equipment

$$ Furniture and equipment was originally purchased on $1$ July $2021$ at a cost of

R$1680000.$ Depreciation is provided at $10\%$ p$.$a$.$ This furniture and equipment was

destroyed by fire in the factory during the last week of April $2024$ and was not insured.

The depreciation and loss as a result of the fire has been a correctly accounted for in the

operating expenses for the year. Despite the damage caused by the fire, Casio Ltd could

still continue business in its existing premises.

$$ On $1$ June $2024$ the company purchased new furniture and equipment. This new furniture

and equipment cost R$2100000$ and management considers it to have a useful life of $5$

years and no residual value.

$$ The tax authorities have granted an annual allowance of $20\%($this allowance is not

apportioned for time$).$

Intangible asset

$$ Casio Ltd obtained the help of a website consultant to design a new website for the

company in order to boost on$-$line sales during the $2023$ financial year. The consultant

charged R$400000$ for the website development and the financial director agreed to pay

R$200000$ when development commenced. This was capitalized when paid.

However, as many difficulties arose due to additional firewalls required, by the end of the

$2023$ financial year end management was uncertain whether this website would be

feasible and wrote of the R$200000$ as an expense.

$$ During the $2024$ financial year, new software programs became available which aided in

the security features required for the website. Management incurred an additional

R$118000$ for this new software program and paid the consultant the balance of his fee.

By $30$ April $2024,$ management could prove feasibility of the new website and the

availability of a market and subsequently planned to launch the product from $1$ May $2024.$

The financial director, Mr$.$ Pentel, concluded that the website met the requirements of IAS

$38$ and capitalized the costs incurred in the current financial year. The website is to be

amortised over a useful life of $5$ years from the date of launch. This cost has not yet been

included in the $2024$ operating expenses.

Additional information

$$ The deferred tax account had a credit balance of R$84560$ at the beginning of

the year arising from furniture and equipment; royalties received in advance

and prepaid insurance.

$$ The assessment received from the tax authorities for the $2023$ year reflected

that the amount of the assessed tax on taxable profit was R$18000$ more than

the amount provided for current normal tax in the $2023$ year.

$$ The normal tax rate is $28\%$ for all periods presented and the inclusion rate for

purposes of capital gains is $66\mathrm{.}67\%.$

You are required to:

a$)$ Prepare the statement of profit or loss and other comprehensive income of Casio Ltd

for the year ended $30$ June $2024$

$(18$ marks$)$

b$)$ Prepare the taxation $($including the tax reconciliation note$)$ and deferred taxatio