QUESTION: 73

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LM received notification on 10 November 20X4 from one of its customers stating they had ceased trading as they had gone into liquidation. The balance outstanding at 31 October 20X4 was $150,000. In accordance with IAS 10 Events after the Reporting Date this event will be treated as:

See Explanation section for answer.

Answer(s): A

Explanation:

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QUESTION: 74

OP holds an investment property purchased on 1 January 20X3 for $700,000 with a useful economic life of 25 years.
At 31 December 20X5 the fair value of the investment property was $750,000 with a revised useful economic life of 25 years from that date.
OP has been carrying the investment property using the cost model until 31 December 20X5. The directors wish to change their valuation method to fair value in accordance with IAS 40 Investment Property.
Which of the following is the correct treatment of the revaluation gain and the value of the property in the statement of financial position at 31 December 20X5?

A gain of $134,000 taken to the statement of profit or loss and $750,000 shown on the statement of financial position.
A gain of $106,000 taken to the statement of profit or loss and $720,000 shown on the statement of financial position.
A gain of $134,000 taken to other comprehensive income and $750,000 is shown on the statement of financial position.
A gain of $106,000 taken to other comprehensive income and $720,000 is shown on the statement of financial position.

Answer(s): A

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QUESTION: 75

CORRECT TEXT
For the year ending 31 March 20X2, MN made an accounting profit of $120,000. Profit included $8,500 of political donations which are disallowable for tax purposes and $8,000 of income exempt from taxation.
MN has $15,000 of plant and machinery which was acquired on 1 April 20X0 and purchased a new machine costing $25,000 on 1 April 20X1. This new machine is entitled to first year allowances of

100% instead of the usual tax depreciation of 20% reducing balance. All plant and machinery is depreciated in the accounts at 10% on cost.
MN also has a building that cost $120,000 on 1 April 20X0 and is depreciated in the accounts at 4% on a straight line basis. Tax depreciation is calculated at 3% on a straight line basis.
Calculate the taxable profit.
Give your answer to the nearest $.

$98300

Answer(s): A

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QUESTION: 76

XYZ operates in Country P where the tax rules state entertaining costs and accounting depreciation are disallowable for tax purposes.
In year ending 31 March 20X4, XYZ made an accounting profit of $240,000. Profit included $14,500 of entertaining costs and $5,000 of income exempt from taxation. XYZ has plant and machinery with accounting depreciation amounting to $26,300 and tax depreciation amounting to $35,200.
Calculate the taxable profit for the year ended 31 March 20X4.

$221,600
$258,400
$239,400
$240,600

Answer(s): D

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QUESTION: 73

Explanation:

QUESTION: 74

QUESTION: 75

QUESTION: 76