Question
SECTION A [30 MARKS] Answer ALL the questions in this section. Question 1 Manzini Limited has a profit before tax of R215 600 for the
SECTION A [30 MARKS] Answer ALL the questions in this section.
Question 1 Manzini Limited has a profit before tax of R215 600 for the year ended 31 December 2021.This profit has been correctly calculated after considering the following information:
A provision for legal fees was increased by R15 300 in 2021.The legal costs will only be tax deductible in the year that the legal costs are paid. No legal costs were paid in 2021.
Research costs expensed in 2021 amounted to R16 700.The tax authority allows research costs to be written off over 4 years.
Interest income of R4 600 is still receivable (taxable in 2021).
A fine of R8 400 was incurred during 2021 (not deductible for tax purposes).
Electricity of R5 500 is due in 2021 but has not yet been paid (deductible in 2021).
Rent income received in advance (i.e in respect of 2022), R8 000 taxable in 2021.
Depreciation was expensed during the year. The asset was purchased for R110 000 and is being depreciated at 25% per annum on cost. The tax authority allows a capital allowance at 10% of cost.
Dividend income of R2 300 was earned during 2021(exempt from tax).
The water bill for the first month of 2022 has already been paid,R4 800 taxable in 2021.
Assume a tax rate of 28%. Required:
1.1 Calculate the current tax for the year ended 31 December 2021 (14 marks)
1.2 Show the related journal for the year ended 31 December 2021. (2 marks)
1.3 What is the difference between taxable profits and accounting profits?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started