Ndlovu Jam Ltd is a company specializing in the manufacturing of various types of

jams and sauces.

The following is an extract of Ndlovu Jam Ltd$$s trial balance for the year

ended $31$ December $2023$:

Notes Debit

R

Credit

R

Administration building $$ cost $1\mathrm{.}11500000$

Delivery vehicles $$ cost $1\mathrm{.}21150000$

Administration building $$ accumulated depreciation $1\mathrm{.}1150000$

Delivery vehicles $$ accumulated depreciation $1\mathrm{.}2330000$

Trade receivables $2115000$

Profit before tax $3962000$

Additional information

$1.$ Property, plant and equipment

$1\mathrm{.}1$ Administration building

Ndlovu Jam Ltd acquired an administration building at a cost of R$1500000$ on

$1$ January $2022.$ On this date the administration building was available for use as

intended by management. The administration building has a residual value of Rnil

and is depreciated over $20$ years according to the straight$-$line method. The

SA Revenue Service does not allow a capital allowance on the administration

building.

$1\mathrm{.}2$ Delivery vehicles

On $1$ January $2023$ Ndlovu Jam Ltd purchased a new delivery vehicle for

R$650000.$ The delivery vehicle was available for use, as intended by management,

and brought into use on this date.

Ndlovu Jam Ltd sold a delivery vehicle for R$550000$ at year end on

$31$ December $2023.$ The delivery vehicle was originally acquired on

$1$ January $2022$ at a cost price of R$500000.$ The delivery vehicle was available for

use, as intended by management, and brought into use on this date. On the date

the delivery vehicle was sold, the accumulated depreciation amounted to

R$200000.$ Only the following journal entry was recorded for the sale of the delivery

vehicle in the accounting records of Ndlovu Jam Ltd for the year ended

$31$ December $2023$:

Dr

R

Cr

R

Bank $($SFP$)550000$

Sale of delivery vehicle $($P$/$L$)550000$

Recording of sale of delivery vehicle

FAC$3701/101/1/2024$

$2$

ASSESSMENT $01($First semester$)($continued$)$

The delivery vehicles are depreciated according to the straight$-$line method over

five $(5)$ years with no residual value.

The SA Revenue Service allows a capital allowance over four $(4)$ years $($not prorata$)$ on the delivery vehicles.

No other delivery vehicles were acquired or sold during the year.

$2.$ Trade receivables are as follows:

$2022$

R

$2023$

R

Trade receivables $130000150000$

Allowance for credit losses $(25000)(35000)$

$105000115000$

The SA Revenue Service allows $25\%$ of the allowance for credit losses as a

deduction. Actual credit losses incurred are written off directly to the statement of

profit or loss and other comprehensive income and not against the allowance for

credit losses.

$3.$ Profit before tax

Included in profit before tax are the following line$-$items:

$2023$

R

$$ Foreign income received from China. The foreign income is not

taxable in South Africa in terms of a double taxation agreement.

Ndlovu Jam Ltd paid foreign taxes of R$27000$ on this income.

$180000$

$$ Allowance for credit losses $($refer $2)10000$

$$ Sale of delivery vehicle $($refer $1\mathrm{.}2)550000$

$$ Donation $($not tax deductible$)13000$

$$ Depreciation $$ administration building $75000$

$$ Depreciation $$ delivery vehicles $230000$

$$ Insurance premium paid for the year $1$ November $2023$ to

$31$ October $2024.$

$84000$

$4.$ Taxation

$$ The company provides for deferred tax on all temporary differences according

to the statement of financial position approach. There are no exempt or

temporary differences except those mentioned in the question. There is

certainty beyond any reasonable doubt that the company will have sufficient

taxable profit in future against which any deductible temporary differences can

be utilised.

$$ The deferred tax liability balance was R$1750$ on $31$ December $2022,$ which you

may assume to be correct.

FAC$3701/101/1/2024$

$3$

ASSESSMENT $01($First semester$)($continued$)$

$$ The SA Normal tax rate changed from $28\%$ in $2022$ to $27\%$ in $2023.$ The capital

gains tax inclusion rate is $80\%.$

$$ Ignore the implications of Value Added Tax $($VAT$).$

$$ The following is an extract of the statement of financial position $$SA Revenue

Service $-$ current tax$$ general ledger account of Ndlovu Jam Ltd for the year

ended $31$ December $2023$:

SA Revenue Service $-$ current tax

Debit R Credit

R

$31/07/2023$ Bank $(1$

st

provisional tax

payment for

$2023,$ including

penalties for

late payment

of R$2000)$

$4000001/01/2023$ Opening balance

$($relating to $2022$

tax assessment$)$ b$/$d

$20000$

$31/12/2023$ Bank $(2$

nd

provisional tax

payment for

$2023)$

$52000$

$28/02/2023$ Bank $($Final

payment for

$2022$ tax

assessment$)$

$2300031/12/2023$ Closing balance c$/$d $95000$

$115000115000$

$01/01/2024$ Opening balance b$/$d $95000$

$$ The accountant of Ndlovu Jam Ltd has not yet made provision for current tax

in the financial statements of Ndlovu Jam Ltd for the year ended

$31$ December $2023.$

$$ Ndlovu Jam Ltd agrees with the $2022$ tax assessment issued by the SA

Revenue Service. The difference is due to expenses claimed by Ndlovu Jam

Ltd for the $2022$ ta