Question 1 A company has a taxable TDs of $40 000 before taking into account unutilized cumulative assessed loss of $60 000. It is uncertain if future taxable profit will be available. Assume a tax rate of 29%. Required i) How much will be recognized as a deferred tax asset. ii) What will be the net deferred tax balance in that year. iii) Calculate the amount to be recognized as a tax asset in the next year, if taxable TDs increase by $30 000 and the loss remains at $60 000. (15 marks)

b) In 2016 a company has received a claim for damaged goods from a customer. The companys legal advisors have advised that about $80 000 will be needed to settle the claim.

In 2017 the claim is still not settled and the lawyers advise that $75 000 could be needed to settle the claim.

In 2018 the dispute is still not finalized and the lawyers estimate that $90 000 would be required to settle the claim.

The claim is finally settled in 2019 by payment of $100 000.

Required: Show the journal entries for these transactions (10 marks)

Question 2 A company purchased plant and equipment 4 years ago for $100 000. Depreciation is provided using the straight line method over 10 years. The company decided to revalue the plant and equipment at the end of the fourth year. The carrying amount was $60 000 (100 000 40 000). The net replacement cost of the plant and equipment was considered to be $75 000 at that date. Required: Calculate, using the 2 methods allowed by IAS16 a) i) gross replacement cost b) accumulated depreciation on gross replacement cost the carrying amount c) show the journal entries for the calculation (25 marks) Question 3 Explain the stages in the standard setting process. (25 marks)