FAC3761 ASSIGNMENT 1 OF 2021 SOLUTIONS

FAC3761 ASSIGNMENT 1 OF 2021

, (a) Calculation of corrected profit for the year ended 28 February 2021

R
Profit before tax 2 141 718
Change in accounting estimate (𝑖) (242 133)
Change in accounting policy (23 000 − 13 000) 10 000
Correct profit before tax 1 909 585


Calculations

i. Change in accounting estimate

R
Depreciation before 563 200
change(5(35020 40070−2206084−0020−648040 000000) ) 805 333
Depreciation after change [
3 ]
Change in accounting estimate 242 133


(b) Calculation of deferred tax for the year ended 28 February 2021

Carrying Tax Base Temporary Deferred tax
Amount Difference asset (liability)
@ 28%
R R R R
Cigarette making machine (𝑖) 2 010 667 1 100 000 910 667 (254 987) L
Inventory 301 000 278 000 23 000 (6 440) L
Revenue received in advance 63 000 - (63 000) 17 640 A
Prepaid expenses (150 000 ∗ 50 000 - 50 000 (14 000) L
1 )
3
Deferred tax liability 920 667 (257 787) L


Calculations

(i) Cigarette making machines

Carrying amount = (5 500 000 − 2 684 000 − 805 333)
= 𝑹𝟐 𝟎𝟏𝟎 𝟔𝟔𝟕

Tax Base= [5 500 000 − (5 500 000 ∗ 20% ∗ 4)]
= 𝑹𝟏 𝟏𝟎𝟎 𝟎𝟎𝟎