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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

Which TWO of the following would improve a company's short term cash flow position?

Options:

Postponing non essential capital expenditure

Increasing the working capital cycle by making payments to suppliers early

Taking advantage of bulk discounts offered on inventory purchases

Reducing levels of inventory by implementing a just in time system for purchasing

Paying a bonus to staff for exceptional performance

Question 3

DE purchased an asset on 1 January 20X1 for $60,000 with a useful economic life of six years and a residual value of $3,000.

DE uses straight line depreciation for this asset.

On 31 December 20X3 the asset has a value in use of $ $28,000 and a fair value of $26,000.

Which of the following values should be used for the asset in DE's statement of financial position as at 31 December 20X3?

Options:

$28,000

$26,000

$30,000

$31,500

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