Case study 4: RCC Company SAOG("the Company is a joint stock company registered with the Ministry of Commerce and Industry on 1 March 2001, in accordance with the provisions of the Commercial Companies Law 1974, as amended, of the Sultanate of Oman. The Company's principal activity is the manufacturing of construction material. The Company's principal place of business is located at Ibri, Sultanate of Oman. Given below are the details of the balances as at the end of the year 2019: Share capital: The authorized share capital of the Company consists of 250,000,000 shares of Rial 0.100 cach. The issued and paid-up share capital of the Company consists of 246,844,730 shares Trade and other payables include the following: Trade payables RO 2.241.975, Other accrued expenses RO 1,174,546, Accrued employee benefits RO 238,805, Advances from customers RO 51.260. Creditors for capital expenditure RO 33,338, Retentions payable RO 31,783, Social security taxes payables RO 10.163. Directors remuneration payables RO 100,000 Cost of tumover for the year includes: Cost of raw materials and consumables RO 6.982.970, Fuel and electricity RO 1,852,712, Direct wages RO 1.930.298, Repairs and maintenance RO 1.163,662 Other factory overheads RO 89,717 Provision for obsolete and slow-moving inventories RO 50.000 Other income has the following: Foreign exchange gains RO 33,312, Sale of scrap RO 43.150. Profit on sale of property, plant and equipment RO 11,615 Salaries and other related staff costs includes: Salaries RO 808.912. Other related staff costs RO 1.364,604 General and administrative expenses have the following expenditures: Vehicle maintenance RO 64,300, Travelling and conveyance RO 16,132. Insurance RO 49.975, Office rent RO 28.980. Registration and renewals RO 31.928, Communication expenses RO 27,800, Repairs and maintenance RO 31.238 Directors' remuneration and sitting fees RO 107,400, Miscellaneous expenses RO 56,539 Selling and distribution expense are Outward freight charges RO 2,417.057. Advertising expenses RO 576,327, Travelling expenses RO 175,833 Tax related expenses. The total Income tax expense for the year amounted to 1.285.184, curent tax liability is 1.214.997 and deferred tax liability RO 377,595 The turnover for the year amounted to RO 30,828,916 The finance cost for the year totaled to RO 34,711 For the year there was realized fair value loss on available for sale investments of RO 656,062 Property plant and equipment includes the following assets as given below with their respective amounts of cost and accumulated depreciation as at the year-end: Cost RO Accumulated Depreciation RO Plant and Machinery 25.349.257 9,766,881 Buildings 7,097.183 2,404,891 Freehold land 185.412 Tools and Instruments 241.426 221.112 Furniture and fixtures 637,459 503.889 Office equipment 353.949 303.716 Motor vehicles 663,647 318,098 Other equipment 639.110 374,851 Case study 5: Part 1: There had been a group discussion on various aspects related to accounting amongst few graduates. Each graduate had come up with an opinion about the topics that are been discussed below. You are required to review each of the discussion and validate their opinion with required explanation. Also, you need to provide the correct opinion in case you disagree with all the opinions. (2 marks - Min 100 words) Discussion: In the understanding of deferred tax one must be clear about the presence of temporary and permanent timing differences. Moreover, such differences only appear if you are preparing financial statement on two different basis especially for taxation purpose. Graduate I mentioned that deferred tax does not occur because of timing difference and moreover the company is not allowed to prepare financial statements on different basis whatsoever. The company only must follow IFRS in preparation of financial statements. Graduate 2 stated that deferred tax is because of permanent timing differences and such difference does arise due to use of different basis in preparation of financial statement Graduate 3 stressed upon the fact that deferred tax is due to temporary timing difference, but the company need not follow different basis for preparation of financial statements Graduate 4 mentioned that deferred tax cannot be due to timing difference, but the company has the freedom to follow different basis for preparation of financial statements Part 2: You are a junior accountant who is involved in tax related matters of the company. The senior accountant has provided with a scenario related to deferred taxes which you need to deal with. The tax rate is 15%. The Company has purchased a plant in the year 2015 for RO 200,000. The plant is estimated to have 10 years of useful life. It was decided that for the book puposes the depreciation rate to be used should be 10% straight line method. But for the tax purposes the depreciation rate to be used is 13.333% on cost. The company wants to know the deferred tax amounts that will be generated due to such plant depreciation over the lifetime of the asset You are required to provide a detailed calculation for the above situation along with necessary comments showing deferred tax movement over the life of the asset. (3 marks) Case study 5: Part 1: There had been a group discussion on various aspects related to accounting amongst few graduates. Each graduate had come up with an opinion about the topics that are been discussed below. You are required to review each of the discussion and validate their opinion with required explanation. Also, you need to provide the correct opinion in case you disagree with all the opinions. (2 marks - Min 100 words) Discussion: In the understanding of deferred tax one must be clear about the presence of temporary and permanent timing differences. Moreover, such differences only appear if you are preparing financial statement on two different basis especially for taxation purpose. Graduate I mentioned that deferred tax does not occur because of timing difference and moreover the company is not allowed to prepare financial statements on different basis whatsoever. The company only must follow IFRS in preparation of financial statements. Graduate 2 stated that deferred tax is because of permanent timing differences and such difference does arise due to use of different basis in preparation of financial statement Graduate 3 stressed upon the fact that deferred tax is due to temporary timing difference, but the company need not follow different basis for preparation of financial statements Graduate 4 mentioned that deferred tax cannot be due to timing difference, but the company has the freedom to follow different basis for preparation of financial statements Part 2: You are a junior accountant who is involved in tax related matters of the company. The senior accountant has provided with a scenario related to deferred taxes which you need to deal with. The tax rate is 15%. The Company has purchased a plant in the year 2015 for RO 200,000. The plant is estimated to have 10 years of useful life. It was decided that for the book puposes the depreciation rate to be used should be 10% straight line method. But for the tax purposes the depreciation rate to be used is 13.333% on cost. The company wants to know the deferred tax amounts that will be generated due to such plant depreciation over the lifetime of the asset You are required to provide a detailed calculation for the above situation along with necessary comments showing deferred tax movement over the life of the asset. (3 marks) infile.php/3179 Higher College of Technolo. Higher College of Technology - e-learning . Case study 4: RCC Company SAOG("the Company") is a joint stock company registered, with the Ministry of Commerce and Industry on 1 March 2001, in accordance with the provisions of the Commercial Companies Law 1974, as amended, of the Sultanate of Oman. The Company's principal activity is the manufacturing of construction material. The Company's principal place of business is located at Ibri, Sultanate of Oman Given below are the details of the balances as at the end of the year 2019: Share capital: The authorized share capital of the Company consists of 250,000,000 shares of Rial 0.100 each. The issued and paid-up share capital of the Company consists of 246,844,730 shares. Trade and other payables include the following: Trade payables RO 2.241.975, Other accrued expenses RO 1,174,546, Accrued employee benefits RO 238,805, Advances from customers RO 51,260, Creditors for capital expenditure RO 33,338, Retentions payable RO 31,783, Social security taxes payables RO 10,163, Directors' remuneration payables RO 100.000, Cost of turnover for the year includes: Cost of raw materials and consumables RO 6,982.970, Fuel and electricity RO 1,852,712, Direct wages RO 1.930,298, Repairs and maintenance RO 1,163,662 Other factory overheads RO 89.717 Provision for obsolete and slow-moving inventories RO 50,000 Other income has the following: Foreign exchange gains RO 33,312, Sale of scrap RO 43,150, Profit on sale of property, plant and equipment RO 11,615 Salaries and other related staff costs includes: Salaries RO 808,912. Other related staff costs RO 1,361,604 General and administrative expenses have the following expenditures: Vehicle maintenance RO 61,300, Travelling and conveyance RO 16,132. Insurance RO 49.975, Office rent RO 28,980, Registration and renewals RO 31.928. Communication expenses RO 27,800, Repairs and maintenance RO 31.238, Directors' remuneration and sitting fees RO 107,400, Miscellaneous expenses RO 56,539 Selling and distribution expense are Outward freight charges RO 2,417,057, Advertising expenses RO 576,327, Travelling expenses RO 175,833 Tax related expenses: The total Income tax expense for the year amounted to 1,285,184, current tax liability is 1.214,997 and deferred tax liability RO 377,595 The turnover for the year amounted to RO 30,828,916 The finance cost for the year totaled to RO 34,711 For the year there was realized fair value loss on available for sale investments of RO 656,062 Property plant and equipment includes the following assets as given below with their respective amounts of cost and accumulated depreciation as at the year-end: Cost RO Accumulated Depreciation RO . . Case study 4: RCC Company SAOG("the Company is a joint stock company registered with the Ministry of Commerce and Industry on 1 March 2001, in accordance with the provisions of the Commercial Companies Law 1974, as amended, of the Sultanate of Oman. The Company's principal activity is the manufacturing of construction material. The Company's principal place of business is located at Ibri, Sultanate of Oman. Given below are the details of the balances as at the end of the year 2019: Share capital: The authorized share capital of the Company consists of 250,000,000 shares of Rial 0.100 cach. The issued and paid-up share capital of the Company consists of 246,844,730 shares Trade and other payables include the following: Trade payables RO 2.241.975, Other accrued expenses RO 1,174,546, Accrued employee benefits RO 238,805, Advances from customers RO 51.260. Creditors for capital expenditure RO 33,338, Retentions payable RO 31,783, Social security taxes payables RO 10.163. Directors remuneration payables RO 100,000 Cost of tumover for the year includes: Cost of raw materials and consumables RO 6.982.970, Fuel and electricity RO 1,852,712, Direct wages RO 1.930.298, Repairs and maintenance RO 1.163,662 Other factory overheads RO 89,717 Provision for obsolete and slow-moving inventories RO 50.000 Other income has the following: Foreign exchange gains RO 33,312, Sale of scrap RO 43.150. Profit on sale of property, plant and equipment RO 11,615 Salaries and other related staff costs includes: Salaries RO 808.912. Other related staff costs RO 1.364,604 General and administrative expenses have the following expenditures: Vehicle maintenance RO 64,300, Travelling and conveyance RO 16,132. Insurance RO 49.975, Office rent RO 28.980. Registration and renewals RO 31.928, Communication expenses RO 27,800, Repairs and maintenance RO 31.238 Directors' remuneration and sitting fees RO 107,400, Miscellaneous expenses RO 56,539 Selling and distribution expense are Outward freight charges RO 2,417.057. Advertising expenses RO 576,327, Travelling expenses RO 175,833 Tax related expenses. The total Income tax expense for the year amounted to 1.285.184, curent tax liability is 1.214.997 and deferred tax liability RO 377,595 The turnover for the year amounted to RO 30,828,916 The finance cost for the year totaled to RO 34,711 For the year there was realized fair value loss on available for sale investments of RO 656,062 Property plant and equipment includes the following assets as given below with their respective amounts of cost and accumulated depreciation as at the year-end: Cost RO Accumulated Depreciation RO Plant and Machinery 25.349.257 9,766,881 Buildings 7,097.183 2,404,891 Freehold land 185.412 Tools and Instruments 241.426 221.112 Furniture and fixtures 637,459 503.889 Office equipment 353.949 303.716 Motor vehicles 663,647 318,098 Other equipment 639.110 374,851 Case study 5: Part 1: There had been a group discussion on various aspects related to accounting amongst few graduates. Each graduate had come up with an opinion about the topics that are been discussed below. You are required to review each of the discussion and validate their opinion with required explanation. Also, you need to provide the correct opinion in case you disagree with all the opinions. (2 marks - Min 100 words) Discussion: In the understanding of deferred tax one must be clear about the presence of temporary and permanent timing differences. Moreover, such differences only appear if you are preparing financial statement on two different basis especially for taxation purpose. Graduate I mentioned that deferred tax does not occur because of timing difference and moreover the company is not allowed to prepare financial statements on different basis whatsoever. The company only must follow IFRS in preparation of financial statements. Graduate 2 stated that deferred tax is because of permanent timing differences and such difference does arise due to use of different basis in preparation of financial statement Graduate 3 stressed upon the fact that deferred tax is due to temporary timing difference, but the company need not follow different basis for preparation of financial statements Graduate 4 mentioned that deferred tax cannot be due to timing difference, but the company has the freedom to follow different basis for preparation of financial statements Part 2: You are a junior accountant who is involved in tax related matters of the company. The senior accountant has provided with a scenario related to deferred taxes which you need to deal with. The tax rate is 15%. The Company has purchased a plant in the year 2015 for RO 200,000. The plant is estimated to have 10 years of useful life. It was decided that for the book puposes the depreciation rate to be used should be 10% straight line method. But for the tax purposes the depreciation rate to be used is 13.333% on cost. The company wants to know the deferred tax amounts that will be generated due to such plant depreciation over the lifetime of the asset You are required to provide a detailed calculation for the above situation along with necessary comments showing deferred tax movement over the life of the asset. (3 marks) Case study 5: Part 1: There had been a group discussion on various aspects related to accounting amongst few graduates. Each graduate had come up with an opinion about the topics that are been discussed below. You are required to review each of the discussion and validate their opinion with required explanation. Also, you need to provide the correct opinion in case you disagree with all the opinions. (2 marks - Min 100 words) Discussion: In the understanding of deferred tax one must be clear about the presence of temporary and permanent timing differences. Moreover, such differences only appear if you are preparing financial statement on two different basis especially for taxation purpose. Graduate I mentioned that deferred tax does not occur because of timing difference and moreover the company is not allowed to prepare financial statements on different basis whatsoever. The company only must follow IFRS in preparation of financial statements. Graduate 2 stated that deferred tax is because of permanent timing differences and such difference does arise due to use of different basis in preparation of financial statement Graduate 3 stressed upon the fact that deferred tax is due to temporary timing difference, but the company need not follow different basis for preparation of financial statements Graduate 4 mentioned that deferred tax cannot be due to timing difference, but the company has the freedom to follow different basis for preparation of financial statements Part 2: You are a junior accountant who is involved in tax related matters of the company. The senior accountant has provided with a scenario related to deferred taxes which you need to deal with. The tax rate is 15%. The Company has purchased a plant in the year 2015 for RO 200,000. The plant is estimated to have 10 years of useful life. It was decided that for the book puposes the depreciation rate to be used should be 10% straight line method. But for the tax purposes the depreciation rate to be used is 13.333% on cost. The company wants to know the deferred tax amounts that will be generated due to such plant depreciation over the lifetime of the asset You are required to provide a detailed calculation for the above situation along with necessary comments showing deferred tax movement over the life of the asset. (3 marks) infile.php/3179 Higher College of Technolo. Higher College of Technology - e-learning . Case study 4: RCC Company SAOG("the Company") is a joint stock company registered, with the Ministry of Commerce and Industry on 1 March 2001, in accordance with the provisions of the Commercial Companies Law 1974, as amended, of the Sultanate of Oman. The Company's principal activity is the manufacturing of construction material. The Company's principal place of business is located at Ibri, Sultanate of Oman Given below are the details of the balances as at the end of the year 2019: Share capital: The authorized share capital of the Company consists of 250,000,000 shares of Rial 0.100 each. The issued and paid-up share capital of the Company consists of 246,844,730 shares. Trade and other payables include the following: Trade payables RO 2.241.975, Other accrued expenses RO 1,174,546, Accrued employee benefits RO 238,805, Advances from customers RO 51,260, Creditors for capital expenditure RO 33,338, Retentions payable RO 31,783, Social security taxes payables RO 10,163, Directors' remuneration payables RO 100.000, Cost of turnover for the year includes: Cost of raw materials and consumables RO 6,982.970, Fuel and electricity RO 1,852,712, Direct wages RO 1.930,298, Repairs and maintenance RO 1,163,662 Other factory overheads RO 89.717 Provision for obsolete and slow-moving inventories RO 50,000 Other income has the following: Foreign exchange gains RO 33,312, Sale of scrap RO 43,150, Profit on sale of property, plant and equipment RO 11,615 Salaries and other related staff costs includes: Salaries RO 808,912. Other related staff costs RO 1,361,604 General and administrative expenses have the following expenditures: Vehicle maintenance RO 61,300, Travelling and conveyance RO 16,132. Insurance RO 49.975, Office rent RO 28,980, Registration and renewals RO 31.928. Communication expenses RO 27,800, Repairs and maintenance RO 31.238, Directors' remuneration and sitting fees RO 107,400, Miscellaneous expenses RO 56,539 Selling and distribution expense are Outward freight charges RO 2,417,057, Advertising expenses RO 576,327, Travelling expenses RO 175,833 Tax related expenses: The total Income tax expense for the year amounted to 1,285,184, current tax liability is 1.214,997 and deferred tax liability RO 377,595 The turnover for the year amounted to RO 30,828,916 The finance cost for the year totaled to RO 34,711 For the year there was realized fair value loss on available for sale investments of RO 656,062 Property plant and equipment includes the following assets as given below with their respective amounts of cost and accumulated depreciation as at the year-end: Cost RO Accumulated Depreciation RO