QUESTION $2(15$ marks$)$

Harmony Ltd purchased four motor vehicles for $$40000$ each on $1/1/2015.$

The company depreciates motor vehicles on a straight$-$line basis.

Their expected useful life is five years.

Each motor vehicle has a residual value of $$2500.$

For tax purposes, the motor vehicles depreciate at $25\%$ per annum on a straight$-$line basis.

Accounting profit before tax for the years $2015$ to $2020$ is $$40000$ per annum.

The tax rate is $12\mathrm{.}5\%.$

Required

a$.$ Calculate current taxation, deferred taxation and related figures to be included in the financial statements for the years $2015$ to $2020(9$ marks$)$

b$.$ Explain the limitations of ratios $(2$ marks$)$

c$.$ Explain the strengths and weaknesses of the historical cost accounting $(2$ marks$)$

d$.$ Describe the recognition, measurement and presentation of deferred tax $(2$ marks$)$