QUESTION FOUR $[20$ MARKS$]$

The results of Zambezi Holdings $($Pty$)$ Ltd$,$ a diversified automotive company, for the year ended $31$

March $2023$ are summarised below:

Note P

Income

Sales $16,820,338$

Cost of sales $($all allowable$)(9,609,361)$

$$

$7,210,977$

Other income

Interest received $435,891$

Dividends received $267,942$

Profit on sale of non$-$current assets $287,623$

$$

$8,002,433$

$$

Expenditure

General deductible expenses $4,835,380$

Depreciation $562,982$

Fair value adjustment $785,350$

Provision for future expenses $470,221$

Amortisation of patents $208,864$

Impairment of accounts receivable $3338,602$

VAT cost $489,207$

$$

$7,290,606$

$$

Net profit $711,827$

$$

Notes:

$1.$ Cost of assets and allowances at $1$ April $2022$:

P

Q P $-$ A S R $-001|$ R e v $001$ E f f D a t e : $09-0$

$8-2023$

Page $6$ of $8$

Cost $3,782,290$

Accumulated allowances $(2,678,103)$

$$

Tax value $1,104,187$

$$

Allowances are claimed at the rate of $15\%$ on all assets.

$2.$ The profit on sale of non$-$current assets is made up as follows:

P

Cost $629,560$

Accumulated depreciation $(467,183)$

$$

$162,377$

Add: fair value adjustment $50,000$

$$

$212,377$

Sales proceeds $300,000$

$$

Profit on sale $87,623$

$$

Capital allowances on the sold asset amounted to P$389,361.$

A replacement asset was purchased costing P$805,200.$

$3.$ Impairment of accounts receivable is made up as follows:

P

Debts written off as irrecoverable $110,461$

Irrecoverable debts recovered $(28,662)$

Increase in general allowance for irrecoverable debts $200,000$

Increase in specific allowance for irrecoverable debts $56,803$

$$

$338,602$

$$

$4.$ The VAT cost is made up as follows:

Q P $-$ A S R $-001|$ R e v $001$ E f f D a t e : $09-0$

$8-2023$

Page $7$ of $8$

P

VAT not recovered $48,020$

Late submission penalty $16,273$

Late payment interest $24,914$

$$

$89,207$

$$

$5.$ The company has the following tax credits:

P

Interest received $43,589$

Dividends received $20,096$

Required:

In respect of Zambezi Holdings $($Pty$)$ Ltd for the year ended $31$ March $2023$:

$4\mathrm{.}1$ Calculate the claim for capital allowances using all available reliefs. $[7$ Marks$]$

$4\mathrm{.}2$ Calculate the taxable income, starting with the net profit figure of P$711,827.$

Note: You should show by using a zero $(0)$ any items of other income or expenditure referred to in the

question that do not require adjustment. $[13$ Marks$]$