fac-3701-exam-pack

FEEDBACK ON PREVIOUS EXAMINATION PAPERS OCTOBER / NOVEMBER 2011 SOLUTION 1: ACCOUNTING POLICIES, HANGERS IN ACCOUNTING ESTIMATES AND ERRORS, IAS 10 (AC107) – EVENTS AFTER THE REPORTING PERIOD 1AS12 (AC102) – INCOME TAXES AND IAS 18 (AC111) REVENUE Question 1.1. Calculation of corrected profit before Tax of rainbow Limited for the year ended 28 February 2011 Provisional profit Cash on delivery sales – reversed Credit loss [ 10 000 – 0.10) Change in accounting estimate (300 000 / 2 – 500 000 / 5) Interest – tax Realties – tax 2010 Corrected profit R 690 000 (40 000) (9000) (50 000) (4000) (6000) Question 2 Calculation of current Tax Rainbow Limited for year ended 28 February 2011 Profit before tax (see 91) above) Exempt differences Interest on tax Penalties on tax Dividends received Capital profit on sale of machine (24 000 – 20 000) x (100 – 50%) Temporary Differences Cash on delivery sales Profit on sale of machine (20 000 – 12 000) R 581 000 (52 000) 4 0 00 6000 (60 000) (2000) 87 000 40 000 (8 000)