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QUESTION 1: GROSS INCOME 1.1 Mr Nkomo is a South African resident. He owns a brick making company ('Bricks Innovation Ltd') in South Africa and
QUESTION 1: GROSS INCOME 1.1 Mr Nkomo is a South African resident. He owns a brick making company ('Bricks Innovation Ltd') in South Africa and he supplies bricks to building contractors around the country. On 10 October 2019, Mr Nkomo supplied bricks to Green Buildings (Pty) Ltd ("Green Buildings') worth R400 000. In terms of their agreement, payment was to be made over six months in equal instalments. Mr Nkomo received payment for October and November only. Green Buildings ran into cash flow problems and failed to pay Mr Nkomo from December 2019. Green Buildings made a lot of promises and excuses to Mr Nkomo. Eventually Mr Nkomo instituted court action in February 2020 against Green Buildings for the outstanding amount. To his surprise Green Buildings initially disputed his claim, but the matter was finally resolved in May 2020 in Mr Nkomo's favour. WHAT IS REQUIRED OF YOU? Discuss when the purchase price of the bricks will be included in Mr Nkomo's gross income. [15 marks]
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