TASUN ASSIGNMENT 2: SECOND SEMESTER QUESTION 1 (25 marks, 30 minutes) Marble Robots (Pty) Ltd (Marble) is a manufacturing company and a small business corporation as defined in the Income Tax Act. The accountant left without giving notice to pursue herpes for music. She had correctly calculated the taxable income for the year of assessment anong 31 March 2019 to be R2 486 000 before taking the following transactions into account Notes: 1. Machinery and equipment A new crane was acquired at a cost of R600 000 on 1 January 2019 after the old crane was destroyed in a riot by striking staff on 22 December 2018. The new crane's brakes were modified at a cost of R40 000 to make the crane safer to use in the operations of the company and it was finally brought into use on 1 February 2019. The cranes are used in the company's manufacturing activities. The old crane was originally purchased on 1 April 2013 for R450 000 and had a tax value of Rnil on 22 December 2018. A steel recycling company paid Marble R20 000 for the scrap of the crane. Other items damaged in the riot were the main gate and security house. These were repaired at a cost of R13 000 which was recovered from the insurance company on 15 February 2019. 2. Buildings Marble's head office was located in a leased (rented) premises at a monthly rental of R20 000 until 31 December 2018. On 1 January 2019 Marble acquired a new and unused building for R4 800 000 directly from the developer and moved its offices to the new building on the same date due to a dispute with the landlord of the leased premises. The building was fully furnished on 1 February 2019 and the cost of the furniture was R80 000. Contract Marble was awarded a contract to build a new power station for R10 000 000 by the Power Group. The building project will begin on 1 October 2019. The contract stipulates that Marble will receive an upfront payment for R200 000 to purchase the required materials. On 25 February 2019 Marble received the R200 000. On 10 March 2019 the board of directors of Marble approved a bonus of R20 000 for the sales director for getting the contract. The bonus was only paid to the director on 27 April 2019. Baddebits Marble wrote off a bad debt of R128 000 as the customer had become insolvent and could not pay the det QUESTION 1 (continued) 5. Electricity bill The electricity bill for March 2019 for R8 500 was only received on 10 April 2018 6. Motor vehicle On 1 January 2018 Marble acquired a new vehicle for R150 000 to be used by the engineers for site visits Marble was approached by the Tshwane municipality to sell a truck to them when Marble decided to discontinue a waste disposal venture with the municipality. The truck was acquired for R210 000 on 1 May 2018 and was sold for R80 000 on 31 January 2019 Marble has elected to use the section 11(0) scrapping allowance, where applicable. 7. Restraint of trade The head architect resigned from Marble to start his own construction company. Marble paid the architect a restraint of trade compensation of R129 000 on 1 April 2018 in order to restrict him from starting his construction company in the same town as Marble for a period of two years. Only R115 000 of the restraint of trade payment was taxable in the architect's hands. Sales Marble concluded a sales transaction on 15 March 2019 for R380 000 and the amount was still outstanding on 31 March 2019. The company earned interest of R17 000 for the period until 31 March 2019 Marble incurred the following legal expenses: Collection of trade debtors Legal contract - director's holiday home purchase 10 000 8 000 18 000 10 A trademark. RING. was purchased on 1 January 2019 for R80 000. The expected useful life of the trademarksght years. On 1 December 2018, the company also renewed the regis tration of its BEEP trademark for another five years at a cost of R15 000 REQUIRED: MARKS Calculate the income tax tended 31 March 2019 for Marble Robots (Pty) Ltd for the year of assess- 25 END OF ASSIGNMENT 2 TASUN ASSIGNMENT 2: SECOND SEMESTER QUESTION 1 (25 marks, 30 minutes) Marble Robots (Pty) Ltd (Marble) is a manufacturing company and a small business corporation as defined in the Income Tax Act. The accountant left without giving notice to pursue herpes for music. She had correctly calculated the taxable income for the year of assessment anong 31 March 2019 to be R2 486 000 before taking the following transactions into account Notes: 1. Machinery and equipment A new crane was acquired at a cost of R600 000 on 1 January 2019 after the old crane was destroyed in a riot by striking staff on 22 December 2018. The new crane's brakes were modified at a cost of R40 000 to make the crane safer to use in the operations of the company and it was finally brought into use on 1 February 2019. The cranes are used in the company's manufacturing activities. The old crane was originally purchased on 1 April 2013 for R450 000 and had a tax value of Rnil on 22 December 2018. A steel recycling company paid Marble R20 000 for the scrap of the crane. Other items damaged in the riot were the main gate and security house. These were repaired at a cost of R13 000 which was recovered from the insurance company on 15 February 2019. 2. Buildings Marble's head office was located in a leased (rented) premises at a monthly rental of R20 000 until 31 December 2018. On 1 January 2019 Marble acquired a new and unused building for R4 800 000 directly from the developer and moved its offices to the new building on the same date due to a dispute with the landlord of the leased premises. The building was fully furnished on 1 February 2019 and the cost of the furniture was R80 000. Contract Marble was awarded a contract to build a new power station for R10 000 000 by the Power Group. The building project will begin on 1 October 2019. The contract stipulates that Marble will receive an upfront payment for R200 000 to purchase the required materials. On 25 February 2019 Marble received the R200 000. On 10 March 2019 the board of directors of Marble approved a bonus of R20 000 for the sales director for getting the contract. The bonus was only paid to the director on 27 April 2019. Baddebits Marble wrote off a bad debt of R128 000 as the customer had become insolvent and could not pay the det QUESTION 1 (continued) 5. Electricity bill The electricity bill for March 2019 for R8 500 was only received on 10 April 2018 6. Motor vehicle On 1 January 2018 Marble acquired a new vehicle for R150 000 to be used by the engineers for site visits Marble was approached by the Tshwane municipality to sell a truck to them when Marble decided to discontinue a waste disposal venture with the municipality. The truck was acquired for R210 000 on 1 May 2018 and was sold for R80 000 on 31 January 2019 Marble has elected to use the section 11(0) scrapping allowance, where applicable. 7. Restraint of trade The head architect resigned from Marble to start his own construction company. Marble paid the architect a restraint of trade compensation of R129 000 on 1 April 2018 in order to restrict him from starting his construction company in the same town as Marble for a period of two years. Only R115 000 of the restraint of trade payment was taxable in the architect's hands. Sales Marble concluded a sales transaction on 15 March 2019 for R380 000 and the amount was still outstanding on 31 March 2019. The company earned interest of R17 000 for the period until 31 March 2019 Marble incurred the following legal expenses: Collection of trade debtors Legal contract - director's holiday home purchase 10 000 8 000 18 000 10 A trademark. RING. was purchased on 1 January 2019 for R80 000. The expected useful life of the trademarksght years. On 1 December 2018, the company also renewed the regis tration of its BEEP trademark for another five years at a cost of R15 000 REQUIRED: MARKS Calculate the income tax tended 31 March 2019 for Marble Robots (Pty) Ltd for the year of assess- 25 END OF ASSIGNMENT 2