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FAC3701 Assignment 1 (COMPLETE ANSWERS) Semester 2 2024. R44,63   Add to cart
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FAC3701 Assignment 1 (COMPLETE ANSWERS) Semester 2 2024.
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FAC3701 Assignment 1 (COMPLETE ANSWERS) Semester 2 2024. TopStyle Ltd is a manufacturer and retailer of smartphone accessories. TopStyle Ltd was incorporated on 1 July 2021. The profit before tax for the year ended 30 June 2023 amounted to R2 800 000, after taking into account the information belo...

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  • August 22, 2024
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FAC3701

Assignment 1 2024 Semester 2

, Part A: Calculation of Deferred Tax Balance for TopStyle Ltd as of 30 June 2022
and 30 June 2023

To determine the deferred tax balance in the statement of financial position for TopStyle
Ltd, we'll use the statement of financial position approach according to IAS 12, "Income
Taxes." This approach involves recognizing deferred tax assets and liabilities based on
the temporary differences between the carrying values of assets and liabilities in
financial reporting and their tax bases.

Step 1: Identifying Temporary Differences

1. Administration Building

 Carrying amount (1 July 2022): R1,500,000 - (R1,500,000 ÷ 15 years) × 9/12
months = R1,425,000
 Tax base: R1,500,000
 Temporary difference: R1,425,000 - R1,500,000 = (R75,000)
 Deferred tax (2022): No deferred tax is recorded as the SA Revenue Service
does not allow tax deductions for the building.

For the year ended 30 June 2023:

 Carrying amount (30 June 2023): R1,500,000 - (R1,500,000 ÷ 15 years) ×
21/12 months = R1,350,000
 Tax base: R1,500,000
 Temporary difference: R1,350,000 - R1,500,000 = (R150,000)
 Deferred tax (2023): No deferred tax since no tax allowance is available on the
building.

2. Delivery Vehicles For the old delivery vehicles:

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