Question 6

a) Gourmet Food Delicacies Ltd is a specialty delicatessen which imports and sells a variety of food products. The turnover of the delicatessen for the year ended 31 March 2023 was $985,750. The owner has not done a complete stock take but estimates the value of the stock at year end was $9,500. Closing stock as at 31 March 2022 was $8,450.

Task: Can Gourmet Food Delicacies Ltd value its closing stock as at 31 March 2023 at $8,450? Discuss your analysis and provide a relevant statutory reference.

b) Stocks of spare parts held by a factory for maintaining plant and equipment are treated differently for tax purposes from stocks of spare parts held for sale or exchange in the ordinary course of business.

Task: Explain the reason for the different treatment of spare parts and provide relevant statutory references.