Instructions:

1. To distinguish between assets and liabilities, only use a negative sign for liabilities
2. For deferred tax calculation, kindly indicate a (negative sign) if its a deferred tax liability.
3. Kindly consider the negative signs when answering question 26-40
4. For journal entries, all amounts should be shown as a positive.
5. Do not leave spaces between figures. If it is 10 thousand write it as 10000. Please do not include the dollar sign.

Ignore value-added tax

Assume that all assets were immediately paid for in cash and that there were no residual value or useful life changes, unless otherwise indicated.

Fast & Furious Ltd (F&F) is a car dealership, specialising in the sale of sport cars and other luxury cars. F&F has a wide network established to enable the customer to find whatever vehicle they might desire. They strive to make the buying experience a thrill and achievement. You, as the financial manager, are assisting the new accountant, Mr Vin Diesel, with various taxation issues in order to finalise the annual financial statements. The following information relates to the financial year ended 30 June 2021

Machinery

F&F purchased a new wheel alignment machine for N$245 500 on 1 December 2020. Delivery and setting up costs amounted to N$14 500. The wheel alignment machine was available for use from 1 January 2021. The residual value amounted to N$26 000. This was the only addition to machinery for the year. F&F provides for depreciation on the reducing balance method at 20% per annum.

The tax base of machinery amounted to N$978 000 on 30 June 2020 and the carrying value of the machinery on 30 June 2021, excluding the new wheel alignment machine, was R1 890 000. A total wear-and-tear allowance of N$130 000 was granted on all machinery for the 2021 year of assessment.

Helicopter

On 30 September 2020, F&F purchased a new helicopter to assist with road side assistance for customers. The cost (excluding inspection costs) amounted to N$6 800 000. Large inspections must be performed every three years. The inspection is accounted for as a separate component. The first inspection was performed and paid for on 2 October 2020 at a cost of N$850 000. For safety reasons, the inspection is required before the helicopter is used. Thereafter it must be inspected every three years. Helicopters have an estimated useful life of ten years and the residual value was estimated as N$500 000. Inspection cost has no residual value. Depreciation is provided for on the straight-line method. The NAMRA allows wear-and-tear at 20% per annum for the helicopter (apportioned for periods shorter than a year). The NAMRA allows a deduction of inspection cost in the year of payment.

Vehicles

F&F purchased a Lamborghini as a company car on 1 October 2020 for N$3 120 000. The Lamborghini arrived on 2 November 2020 and was available for use on this date, although it was only brought into use on 1 December 2020. The total useful life of the vehicle is six years and the NAMRA allows wear-and-tear at 33.33% per annum (apportioned for periods shorter than a year) from the date brought into use.

Mr Ludacris, the chief financial officer (CFO) of F&F, was slightly injured when he was involved in an accident while driving the Lamborghini. The accident happened the morning of 2 February 2021. Mr Ludacris is claiming that speed was not a reason for the accident and that the other driver was negligent. The other driver, Mr Dwayne Johnson, however, is stating that Mr Ludacris drove like a maniac and is responsible for the accident. He is suing F&F for R2 630 000 as his Porsche had to be written off. F&Fs lawyers are of the opinion that the claim will be successful and therefore will have to be settled by F&F. The NAMRA will not allow a deduction for the claim at all since it relates to negligence.

Luckily the brand new Lamborghini was only slightly damaged in the accident. The recoverable amount was estimated at N$2 320 000 as at 2 February 2021 which was lower than the carrying amount at this date.

Other

Assume a normal tax rate of 28% for the financial year ended 30 June 2021.

Assume that there are no other temporary differences other than those that are apparent from the given information.

1. Determine the carrying amount of Machinery? 2. Determine the Tax Base amount of Machinery 3, Determine the deferred tax asset/(Liabilities) of Machinery 4,Determine the carrying amount of Helicopter 5,Determine the Tax Base of Helicopter 6, Determine the deferred tax asset/(Liabilities) of Helicopter

7, Determine the carrying amount of Vehicle

8,Determine the Tax Base amount of Vehicle

9,

Determine the deferred tax asset/(Liabilities) of Vehicle

9, Determine the carrying amount of Provision for claims 10, Determine the Tax Base of Provision for claims

11, Determine the deferred tax asset/liability of provision for claims.

12, Calculate depreciation relating to inspection cost

13. Calculate the wear and tear for the helicopter 14, Calculate the impairment if any on the vehicle

15,