F1 Exam Dumps : Financial Reporting

RST operates in Country X where the tax rules state entertaining costs and accounting depreciation are disallowable for tax purposes.

In year ending 31 May 20X4, XYZ made an accounting profit of $480,000.

Profit included $16,300 of entertaining costs and $15,150 of income exempt from taxation.

XYZ has plant and machinery with accounting depreciation amounting to $24,200 and tax depreciation amounting to $45,200.

Calculate the tax charge for the year ended 31 May 20X4 assuming all profits are taxed at 25%.

EF purchased an asset on 1 September 20X4 for $800,000, exclusive of import duties of $30,000. EF is resident in country Y where indexation is allowed on purchase costs when the asset is disposed of.

EF sold the asset on 31 August 20X9 for $1,500,000 incurring transaction charges of $20,000. The indexation factor increased by 40% in the period from 1 September 20X4 to 31 August 20X9.

Capital gains are taxed at 30%.

What is the tax due on disposal of the asset?

On 1 January 20X2 an entity began work on constructing a factory. It purchased the land for $14 million, built the factory buildings for $11 million and installed plant and equipment for $7 million. The project was completed on 31 December 20X3 when the factory was deemed ready to use, however, the factory did not start operations until 1 June 20X4.

To fund the project the entity borrowed $25 million on 1 January 20X2, with interest at 10% per year.

The loan was repaid in full on 31 December 20X4.

Calculate the total amount to be added to the cost of property, plant and equipment in respect of the above development.

Give your answer to the nearest $ million.