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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
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 Ltds trial balance for the year ended December : Notes Debit R Credit R Administration building cost Delivery vehicles cost Administration building accumulated depreciation Delivery vehicles accumulated depreciation Trade receivables Profit before tax Additional information Property, plant and equipment Administration building Ndlovu Jam Ltd acquired an administration building at a cost of R on January 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 years according to the straightline method. The SA Revenue Service does not allow a capital allowance on the administration building. Delivery vehicles On January Ndlovu Jam Ltd purchased a new delivery vehicle for R 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 at year end on December The delivery vehicle was originally acquired on January at a cost price of R 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 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 December : Dr R Cr R Bank SFP Sale of delivery vehicle PL Recording of sale of delivery vehicle FAC ASSESSMENT First semestercontinued The delivery vehicles are depreciated according to the straightline method over five years with no residual value. The SA Revenue Service allows a capital allowance over four years not prorata on the delivery vehicles. No other delivery vehicles were acquired or sold during the year. Trade receivables are as follows: R R Trade receivables Allowance for credit losses The SA Revenue Service allows 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. Profit before tax Included in profit before tax are the following lineitems: 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 on this income. Allowance for credit losses refer Sale of delivery vehicle refer Donation not tax deductible Depreciation administration building Depreciation delivery vehicles Insurance premium paid for the year November to October 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 on December which you may assume to be correct. FAC ASSESSMENT First semestercontinued The SA Normal tax rate changed from in to in The capital gains tax inclusion rate is 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 December : SA Revenue Service current tax Debit R Credit R Bank st provisional tax payment for including penalties for late payment of R Opening balance relating to tax assessment bd Bank nd provisional tax payment for Bank Final payment for tax assessment Closing balance cd Opening balance bd 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 December Ndlovu Jam Ltd agrees with the tax assessment issued by the SA Revenue Service. The difference is due to expenses claimed by Ndlovu Jam Ltd for the ta
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 Ltds trial balance for the year
ended December :
Notes Debit
R
Credit
R
Administration building cost
Delivery vehicles cost
Administration building accumulated depreciation
Delivery vehicles accumulated depreciation
Trade receivables
Profit before tax
Additional information
Property, plant and equipment
Administration building
Ndlovu Jam Ltd acquired an administration building at a cost of R on
January 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 years according to the straightline method. The
SA Revenue Service does not allow a capital allowance on the administration
building.
Delivery vehicles
On January Ndlovu Jam Ltd purchased a new delivery vehicle for
R 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 at year end on
December The delivery vehicle was originally acquired on
January at a cost price of R 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 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
December :
Dr
R
Cr
R
Bank SFP
Sale of delivery vehicle PL
Recording of sale of delivery vehicle
FAC
ASSESSMENT First semestercontinued
The delivery vehicles are depreciated according to the straightline method over
five years with no residual value.
The SA Revenue Service allows a capital allowance over four years not prorata on the delivery vehicles.
No other delivery vehicles were acquired or sold during the year.
Trade receivables are as follows:
R
R
Trade receivables
Allowance for credit losses
The SA Revenue Service allows 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.
Profit before tax
Included in profit before tax are the following lineitems:
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 on this income.
Allowance for credit losses refer
Sale of delivery vehicle refer
Donation not tax deductible
Depreciation administration building
Depreciation delivery vehicles
Insurance premium paid for the year November to
October
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 on December which you
may assume to be correct.
FAC
ASSESSMENT First semestercontinued
The SA Normal tax rate changed from in to in The capital
gains tax inclusion rate is
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 December :
SA Revenue Service current tax
Debit R Credit
R
Bank
st
provisional tax
payment for
including
penalties for
late payment
of R
Opening balance
relating to
tax assessment bd
Bank
nd
provisional tax
payment for
Bank Final
payment for
tax
assessment
Closing balance cd
Opening balance bd
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
December
Ndlovu Jam Ltd agrees with the tax assessment issued by the SA
Revenue Service. The difference is due to expenses claimed by Ndlovu Jam
Ltd for the ta
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