PART B (25 marks, 45 minutes) All the information in Part A also relates to Part B, except for the following: All amounts exclude VAT unless stated otherwise and the company is NOT a small business corporation as defined in the Income Tax Act (Act No. 58 of 1962), as amended. Ignore Transaction 1 and Transaction 2 for Part B. The accountant calculated the accounting profit of Go Springboks (Pty) Ltd ("GS") as R2 548638 for the 2023 year of assessment. The following information has been taken into account in the calculation the accounting profit: Notes and additional information: 1. Inventory The accountant determined the following values for inventory for the 2023 year of assessment: 2. Doubtful debts At the end of the financial year the company's IFRS 9 loss allowance relating to impairment (equal to its lifetime expected credit loss) was R58 400. Lease receivables were excluded from the debt figures used in calculating the loss allowance. 3. Design purchased On 1 June 2022, GS purchased a new design for rugby jerseys from a big food supplier in South Africa, Check, for an amount of R125 000 . 4. Interest paid The following interest was paid during the 2023 year of assessment: Interest on a bank overdraft to fund the leasehold improvement (see note 6) R Interest on a SARS account that is in arrears 85400 2687 88087 [TURN OVER] 8 TAX3761 Oct / Nov 2023 QUESTION 1 (continued) PART B (continued) 5. Depreciation The accountant calculated the depreciation for the 2023 year of assessment as R268 744 . A second-hand machine (Machine A) was purchased at a total cost of R480000 on 1 August 2021 and brought into use on 2 September 2021. Due to a change in industry regulations, Machine A had to be sold and was replaced with another new and unused manufacturing machine (Machine B). Machine A was sold for R525 000 (excluding VAT) on 30 October 2022 and Machine B was purchased at a total cost of R747 000 on 15 October 2022 and brought into use on 1 February 2023. GS purchased a delivery vehicle on 30 August 2022 at a cost price of R256 000 and brought it into use on the same date. Binding general ruling No. 7 allows delivery vehicles to be written off over 4 years (where applicable): 6. Rent and leasehold improvement GS signed a new lease agreement on 1 June 2022 with France (Pty) Ltd. The lease agreement is for a period of five years with the option to extend the lease for another three years. The agreement included a monthly rental of R25 000 payable on the first day of each month from 1 June 2022. The new lease agreement stipulated that GS had to effect leasehold improvements of R458 000. The company commenced with the leasehold improvements on 1 July 2022, and they were completed on 30 November 2022 at a total cost of R560 000 and brought into use on 1 January 2023. The value of the improvements will be taxed as gross income in the hands of France (Pty) Ltd. 7. Assessed loss and provisional tax paid GS has an assessed loss of R62 800 brought forward from the 2022 year of assessment. GS made provisional tax payments of R356 800 for the 2023 year of assessment