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ATX812S-ADVANCED TAXATION-2ND OPP-JAN 2025 |
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nAmlBIA unlVERSITY
OF SCIEnCE Ano TECHnOLOGY
FACULTY OF COMMERCE, HUMAN SCIENCES AND EDUCATION
DEPARTMENT OF ECONOMICS, ACCOUNTING AND FINANCE
QUALIFICATION: BACHELOR OF ACCOUNTING
QUALIFICATION CODE: 08BOAH LEVEL: 8
COURSE CODE: ATX812S
COURSE NAME: ADVANCED TAXATION
DATE: JANUARY2025
DURATION: 3 HOURS
PAPER: THEORYAND CALCULATIONS
MARKS: 100
2nd OPPORTUNITY EXAMINATION
EXAMINER(S) Dr. Moses Nyakuwanika
MODERATOR: Mrs. Marian Amakali
INSTRUCTIONS
1. Capture your full name, student number, mode of entry and assessment number on
the first page
2. Answer ALL the questions and manage your time properly.
3. Number each page correctly
4. Write clearly and neatly.
5. Do not write in pencil and do not use tip-ex, as this will not be marked.
6. The names of people and businesses used throughout this assessment do not reflect
the reality and may be purely coincidental.
7. SHOWALLWORKINGS!
THIS QUESTION PAPER CONSISTS OF 5 PAGES (including the front page)
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QUESTION 1
You are presented with the accounts of Chorley Ltd for the year ended 31 December
2023. Chorley Ltd runs a small printing business and the managing director wishes to
know the amount of the companies adjusted trading profit for the year ended 31
December 2023.
Gross profit from trading
Profit on sale of business premiss (1)
Advertisino
Irrecoverable debts
Depreciation
Liqht and heat
Miscellaneous expenses (2)
Motor Car expenses (3)
Rates
Repairs and renewals (4)
Staff wages (5)
Telephone
Total expenses
Profit before tax
N$
642
75
2 381
372
347
555
1 057
2 598
12124
351
N$
25 620
1 750
27 370
(20 502)
6 868
Notes
1) The profit on the sale of premises relates to the sale of a small freehold
industrial unit in which the company stored paper before building the extension.
2) Miscellaneous expenses included:
Subscription to printers' association
45
Contribution to local enterprise aqencv
50
Gifts to customers:
Company calendars costing N$ 7.5 each
75
Two food humpers
95
3) A director uses the motor car 75% for business purposes and 25% for private
purposes.
4) Repairs and renewals comprise the following expenditure:
Refurbishing second hand press before it could be used in the
522
business
RedecoratinQ administration offices
Building extension to enlarge paper store in February 2023
429
1 647
2 598
5) Staff wages include an amount of N$182 for a staff Christmas lunch.
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REQUIREMENT
You are required to calculate Chorley Ltd.'s adjusted trading profit for the year ended
31 December 2023
[25 marks]
NB: You should indicate using zero any items in accounts for which no
adjustment is required.
QUESTION 2
a) What are the options available to estate planning and what are the merits and
drawbacks to each option
[9 marks]
b) What are the objectives and importance of estate planning
[9 marks]
c) What are the characteristics of a good estate plan
[7 marks]
TOTAL MARKS
(25 marks]
QUESTION 3
(a) Briefly explain how partners are assessed regarding their share of a
partnership's trading profit.
[5 marks]
(b) Anne and Betty have been in partnership since 1 January 1997 sharing profits
and losses equally. On 30 June 2020, Betty resigned as a partner and was
replaced on 1 July 2020 by Chloe. The profits were then split in the ratio of 2:1
between Anne and Chloe. The partnership's trading profit is as follows:
N$
Year ended 31 December 2020
60,000
Year ended 31 December 2021
72,000
Anne and Betty each have unrelieved overlap profits of N$3,000.
You are required to calculate the trading profit assessments of Anne, Betty and
Chloe for 2020/21 and 2021/22.
[10 marks]
(c) Daniel and Elvis have been in partnership since 6 April 1995, making up
accounts to 5 April. On 31 December 2020 Elvis resigned as a partner and was
replaced on 1 January 2021 by Frank. For 2020/21 the partnership made a
trading loss of N$40,000, and this has been allocated between the partners as
follows:
N$
Daniel
(20, 000)
Elvis
(15, 000)
Frank
(5, 000)
Each of the partners has investment income. None of them have any capital
gains.
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You are required to discuss how Daniel, Elvis and Frank can relieve their Trading
losses for 2020/21.
[10 marks]
TOTAL MARKS
[25 marks]
QUESTION 4
The following is the statement of comprehensive income of a farmer for the year of
assessment ended 29 February 2024:
Livestock on hand: 28 February 2024
Sales:
Bean crop
Livestock
Maize
Meat
Livestock on hand: 1 March 2023
Administration and general expenses (all allowable)
Depreciation of motor car and office furniture
Donations
Fertilizer
Foodstuff for livestock
Grain bags
Maintenance and repairs:
Farm buildings
Implements
Lorries and tractor
Maize and potato seed
Petrol, oil and grease
Livestock purchases
Railage and transport
Rations for workers
Seed spray
Veterinarv surqeon's fees
Waqes - domestic servants
Wages - farm labourers
Net surplus
11 270
31 340
1 250
100
4 850
4 200
3 000
6 710
650
1 100
11 750
1 300
48 000
815
2 450
3 500
400
2 400
13 500
N$
10 810
15 000
78 040
168 000
19 755
143 020
a) Details of livestock regulations (standard values elected by the taxpayer)
Opening stock
Purchases sales
Closing stock
Bulls
3@N$50= $150
1@N$1140
2N$@50= $100
Cows
(3 years 140@N$40=$5600 10@$1
50@$1 090=54 120@$40=4
and over)
100=11 000 500
800
Oxen
30@$40= $1 200 10@$1
55@$40=2 200
050=10 500
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Tallies and
heifers
(1-2 years) 100@$30= $3 000
(2-3 years)
Calves
(under 1
year)
80@$14= $1 120
50@$4= $ 200
403
$11 270
50@530=26
500
70 $48 000
40@$560=22
400
91 $78 040
90@$30=2 700
55@$14=770
60@$4=240
382 $10 810
b) During the year the farmer and his wife consumed produce and livestock to an
estimated cost of $3 600.
c) The following capital expenditure was incurred during the year:
New implements for farm
$7 100
New tractor for farm
$18 200
New irrigation equipment
$6 000
New borehole
$3 500
d) The depreciation shown in the account exceeds the wear-and tear allowed by
the Commissioner by $100.
e) At 28 February 2024 there was crop of maize growing on the land. It is
estimated that the expenditure laid out on this crop and claimed in the statement
of comprehensive income is $850.
f) There was no produce on hand at the beginning or end of the year of
assessment.
g) Expenditure on petrol, oil and grease includes $650 for private motor-car
expenses
REQUIREMENT:
Calculate the taxable income of the farmer for the year of assessment ending 28
February 2024.
[25 marks]