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KL has S90.000 of plant and machinery which was acquired on 1 June 20X4. Tax depreciation rates on plant and machinery are 20% reducing balance. All plant and machinery was sold for 560,000 on 1 June 20X6

Calculate the tax balancing allowance or charge on disposal tor the year ended 31 May 20X7 and state the effect on the taxable profit.

Options:

A balancing allowance of $2,400 reduces taxable profit.

A balancing charge of $2,400 reduces taxable profit.

A balancing charge of $2,400 increases taxable profit.

A balancing allowance of $2,400 increases taxable profit.

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Question 2

A conservative policy for financing working capital is one where short-term finance is used to fund:

Options:

All of the fluctuating current assets and part of the permanent current assets.

Part of the fluctuating current assets, but no part of the permanent current assets.

All of the fluctuating current assets, but no part of the permanent current assets.

Part of the fluctuating current assets and part of the permanent current assets.

Question 3

On 1 May 20X8 DEF enters into a contract to lease plant with a fair value of $200,000. Annual lease payments of $50,000 are to be paid in advance and DEF incurred direct costs to arrange the lease of S2.000 The present value of future lease payments at 1 May 20X8 is $190,000.

What is the amount to be recognised as a right-of-use asset on 1 May 20X8?

Options:

$192 000

$200,000

$240,000

$242000

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