Question $1($Topic : Current Income Tax IAS$12)25$ marks

The accountant of ABC Limited has presented you with following information relating to the financial year ended $31$ December $2012.$

Profit for the year is R$800000.$ This profit has been correctly calculated and includes the information presented below;

A building was sold on $1$ January $2012$ at profit of R$700000.$ The building had originally costed R$1000000.$ Both the accumulated depreciation and accumulated wear and tear amounted to R$600000$ on the date of sale. The base cost used for the calculation of capital gains $($in terms of the tax legislation$)$ is equal to the original cost.

Included in the income for the year is a receipt of R$80000$ in the form of a dividend. Dividend receipt are exempt from tax.

Included in the expenses of the year are:

$($i$)$ Donations of R$300000,$ of which R$200000$ are not tax deductible for tax purposes.

$($ii$)$ Fines of R$20000,$ all of which are not tax deductible for tax purposes.

Dividends of R$140000$ were declared during the year.

Tax related information

$($i$)$ No temporary tax differences arose during the year.

$($ii$)$ Income tax is levied at $30\%$ on taxable profits.

$($iii$)$ The inclusion rate for capital gains made by companies is $50\%.$

$($iv$)$ Dividends tax is levied at $10\%$ on dividends paid.

Required

$($a$)$ Calculate the taxable profit and current income tax for the year ended $31$ December $2012.$

$[9]$

$($b$)$ Prepare the journals relating to the current income tax, the dividends declared and dividends tax for the year ended $31$ December $2012[9]$

$($c$)$ Prepare in much detail as possible, the statement of comprehensive income and the taxation expense $($on income$)$ note for the year ended $31$ December $2012,$ in accordance with International Financial Reporting Standards $($IFRS$).[7]$