REQUIRED

a$)$ Discuss what the impact on the financial statements of ElGouws Ltd for the year ended $31$ December $2020$ would be$,$ including any possible disclosure consequences, if the company could not ascertain beyond reasonable doubt that the company will have sufficient taxable profit in future against which any deductible temporary differences can be utilised. How would this situation be accounted for in subsequent years if the profit situation of ElGouws improves.

b$)$ Prepare the general journal entries to correctly account for the provisional tax payment made on $31$ July $2021,$ including interest, as well as the dividend declared on $18$ December $2021,$ in the accounting records of ElGouws Ltd for the year ended $31$ December $2021.$

c$)$ Calculate the correct profit before tax in the statement of profit or loss and other comprehensive income of ElGouws Ltd for the year ended $31$ December $2021.$

d$)$ Calculate the deferred tax balance in the statement of financial position of ElGouws Ltd for the year ended $31$ December $2021,$ using the statement of financial position approach. Indicate in your answer if the balance is a deferred tax asset or liability. Include all statement of financial position accounts relating to the information given in the question, irrespective of a resultant Rnil temporary difference, in your calculation.

e$)$ Calculate the current tax due to the SA Revenue Service as it will be disclosed in the statement of financial position of ElGouws Ltd at $31$ December $2021.$ Use the profit before tax as calculated in $($c$)$ above as your starting point. The movement in temporary differences in the current tax calculation should be calculated using the statement of financial position approach.

f$)$ Disclose the income tax expense note, including the tax rate reconciliation, in the notes to the annual financial statements of ElGouws Ltd for the year ended $31$ December $2021.$ No comparative figures are required.

g$)$ For ElGouws Ltd to adhere to the disclosure requirements of IAS $12,$ Income taxes the company should include a tax rate reconciliation as part of their income tax expense note, which will be presented within the notes to the annual financial statements of the company for the year ended $31$ December $2021.$ The junior accountant is unsure what a tax rate reconciliation entails as well as what to include within such a reconciliation. Please write an e$-$mail to the junior accountant where you assist him on this matter. Your answer should include an explanation of what a tax rate reconciliation is as well as explanations of why the items have been included within the tax rate reconciliation of ElGouws Ltd for the year ended $31$ December $2021.$

e$)$ The junior accountant requires your help with the following questions:

i$)$ Why is there no deferred tax implications on the land.

ii$)$ How to determine whether a temporary difference is taxable or deductible and what the implications are for taxable and deductible temporary differences on the determination of the income tax expense.

iii$)$ How to determine the effect of a rate change on the income tax expense

Write a memo to the junior accountant where you explain in detail the principles applicable to the questions above.