Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Simonsberg ( Pty ) Ltd is a company located in Cape Town that manufactures ladies and kiddies clothing. The following information is available for the
Simonsberg Pty Ltd is a company located in Cape Town that manufactures ladies and kiddies clothing.
The following information is available for the year ended February all amounts exclude VAT unless otherwise
stated:
Income Notes R
Sales
Interest received
Expenses and costs
Learnership agreement
Purchases of raw materials during the year
Inventory
Salaries and wages
Bad debts
Legal expenses
Annuity paid to former employee
Broadbased employee share plans
Restraint of trade
Machinery including Vat
Commercial building
Notes:
The company entered into registered learnership agreements that fulfil all the section H criteria with John and
Kate. John was employed on March as a learner on a fulltime basis, with a level NQF qualification. This
qualification will be required to be completed at the end of two years.
Kate a disabled person was registered as a learner on a parttime basis on March with a level NQF
qualification. In terms of the registered learnership agreement, the learnership will be completed at the end of months.
This was duly achieved.
The cost price of the opening stock was R and the market value was R as on March
The cost price of the closing stock was R and the market value was R on February
Salaries paid during the current year of assessment amounted to R and the balance was the companys
contribution towards a provident fund on behalf of its employees.
The following bad debts were written off during the current year of assessment:
Trade debtors of the total bad debts amount
Loan to a supplier of the total bad debts amount
Legal expenses were incurred as follows:
Drafting of a restraint of trade agreement amounting to R for an employee who had resigned to start his own
business.
The balance of the expenses relate to collection of outstanding trade debtors.
The company paid an annuity of R to an exemployee who retired at years of age during the current year of
assessment.
On January the company granted shares to of its permanent staff at no consideration. The market
value per share was R on the date that the shares were offered and they carry no restrictions. The plan in terms of
which the shares were issued by the company qualifies as a broadbased employee share plan in terms of section B
The full payment was made to the former operations manager on December for agreeing not to start a business
in South Africa within a period of five years.
On April a new manufacturing machine was acquired which was brought into use on June The
company elects the Section C writeoff allowance.
The company constructed a mini commercial building on July The building was completed and immediately
brought into use on January
Required:
Calculate in detail Simonsberg Pty Ltds taxable income for the year ended February
Show all workings and full explanations where applicable.
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