The delivery vehicles are depreciated according to the straight$-$line method over

five $(5)$ years with no residual value.

The SA Revenue Service allows a capital allowance over four $(4)$ years $($not prorata$)$ on the delivery vehicles.

No other delivery vehicles were acquired or sold during the year.

$2.$ Trade receivables are as follows:

$2022$

R

$2023$

R

Trade receivables $130000150000$

Allowance for credit losses $(25000)(35000)$

$105000115000$

The SA Revenue Service allows $25\%$ of the allowance for credit losses as a

deduction. Actual credit losses incurred are written off directly to the statement of

profit or loss and other comprehensive income and not against the allowance for

credit losses.

$3.$ Profit before tax

Included in profit before tax are the following line$-$items:

$2023$

R

$$ Foreign income received from China. The foreign income is not

taxable in South Africa in terms of a double taxation agreement.

Ndlovu Jam Ltd paid foreign taxes of R$27000$ on this income.

$180000$

$$ Allowance for credit losses $($refer $2)10000$

$$ Sale of delivery vehicle $($refer $1\mathrm{.}2)550000$

$$ Donation $($not tax deductible$)13000$

$$ Depreciation $$ administration building $75000$

$$ Depreciation $$ delivery vehicles $230000$

$$ Insurance premium paid for the year $1$ November $2023$ to

$31$ October $2024.$

$84000$

$4.$ Taxation

$$ The company provides for deferred tax on all temporary differences according

to the statement of financial position approach. There are no exempt or

temporary differences except those mentioned in the question. There is

certainty beyond any reasonable doubt that the company will have sufficient

taxable profit in future against which any deductible temporary differences can

be utilised.

$$ The deferred tax liability balance was R$1750$ on $31$ December $2022,$ which you

may assume to be correct.

FAC$3701/101/1/2024$

$3$

ASSESSMENT $01($First semester$)($continued$)$

$$ The SA Normal tax rate changed from $28\%$ in $2022$ to $27\%$ in $2023.$ The capital

gains tax inclusion rate is $80\%.$

$$ Ignore the implications of Value Added Tax $($VAT$).$

$$ The following is an extract of the statement of financial position $$SA Revenue

Service $-$ current tax$$ general ledger account of Ndlovu Jam Ltd for the year

ended $31$ December $2023$:

SA Revenue Service $-$ current tax

Debit R Credit

R

$31/07/2023$ Bank $(1$

st

provisional tax

payment for

$2023,$ including

penalties for

late payment

of R$2000)$

$4000001/01/2023$ Opening balance

$($relating to $2022$

tax assessment$)$ b$/$d

$20000$

$31/12/2023$ Bank $(2$

nd

provisional tax

payment for

$2023)$

$52000$

$28/02/2023$ Bank $($Final

payment for

$2022$ tax

assessment$)$

$2300031/12/2023$ Closing balance c$/$d $95000$

$115000115000$

$01/01/2024$ Opening balance b$/$d $95000$

$$ The accountant of Ndlovu Jam Ltd has not yet made provision for current tax

in the financial statements of Ndlovu Jam Ltd for the year ended

$31$ December $2023.$

$$ Ndlovu Jam Ltd agrees with the $2022$ tax assessment issued by the SA

Revenue Service. The difference is due to expenses claimed by Ndlovu Jam

Ltd for the $2022$ tax year which were not allowed by the SA Revenue Service.

$5.$ Assume all amounts to be material.

FAC$3701/101/1/2024$

$4$

ASSESSMENT $01($First semester$)($continued$)$

REQUIRED:

Marks

a$)$ Using the additional information, calculate the correct profit before tax in the

statement of profit or loss and other comprehensive income of Ndlovu Jam Ltd

for the year ended $31$ December $2023.$

b$)$ Calculate the deferred tax balance in the statement of financial position of

Ndlovu Jam Ltd at ended $31$ December $2023$ using the statement of financial

position approach. Indicate if the balance is a deferred tax asset or deferred

tax liability. Your answer must comply with the requirements of IAS $12,$ Income

taxes.

c$)$ Calculate the current tax due to the SA Revenue Service by Ndlovu Jam Ltd

for the year ended $31$ December $2023.$ Use the profit before tax calculated in

$($a$)$ as your starting amount.

Your answer must comply with the requirements of IAS $12,$ Income taxes. The

movement in temporary differences in the current tax calculation should

be calculated using the statement of financial position approach.

d$)$ Prepare the necessary journal entries to correctly record the deferred tax and

the current tax respectively, as calculated in $($b$)$ and $($c$)$ above, in the

accounting records of Ndlovu Jam Ltd for the year ended $31$ December $2023.$

Journal narrations are not required.

No abbreviations for general ledger account names in your journals may be

used.

Indicate in your journal if it is statement of financial Position $($SFP$)$ or statement

of profit or loss and other comprehensive income $($P$/$L$)$ general ledger

account.

e$)$ Disclose the income tax expense note, excluding the tax rate reconciliation, in

the notes to the annual financial statements of Ndlovu Jam Ltd for the year

ended $31$ December $2023,$ according to the requirements of IAS $12,$ Income

taxe