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The company's financial year concludes on the $28$th of February, aligning its reporting period with the end of the winter season in many regions, a critical time for the deployment of sanitizing solutions due to the increased incidence of communicable diseases.

During the fiscal year ending February $28,2022,$ Aladdin Limited faced a unique set of challenges and opportunities. The year was marked by a gradual decrease in global pandemic$-$related restrictions, leading to varied demand fluctuations for sanitizing products across different markets. These dynamics forced Aladdin Limited to reassess its manufacturing and distribution strategies to remain competitive and profitable.

The following is an extract from the Statement of Financial Position of Aladdin Limited for the year ended $28$ February $2022$:

Rand

Current assets:

Prepaid Expenses $$ Water & Electricity $15000$

Accrued Income $$ Interest on fixed deposit $2000$

Non$-$current liabilities:

Deferred tax

$3416$

Current liabilities:

Current tax payable: Income tax $6769$

Income Received in Advance$$ Rent $092$

Accrued Expenses$$ Telephone $8000$

$1.$ On $1$ April $2022$ Aladdin Limited received its tax assessment for income tax for the year ended $28$ February $2022$ which reflected an assessed amount of R$59800.$ The accountant calculated and provided income tax for the $2022$ tax year as R$55476.$ The accountant agreed with the tax assessment and made the final payment on the same day to settle the amount due for the $2022$ tax year.

$2\mathrm{.}1$ Their accountant correctly calculated a Profit BEFORE tax of R$638900$ but needs your help with the tax computation.

Included in Profit before tax are the following transactions for the year ended $29$ February $2023$:

TRANSACTION NOTE RAND

Dividends received Exempt from tax $24372$

Donations paid Not tax deductible $56600$

Profit on sale of machinery See Additional Information $2\mathrm{.}280000$

Depreciation on machinery See Additional Information $2\mathrm{.}390000$

Depreciation on admin buildings No wear and tear allowance allowed by SAR.

$70000$

Depreciation on motor vehicles All vehicles were in use for the full financial year.

Note: A section $11($e$)$ wear and tear allowance of R$132500$ per annum was allowed by

SARS.

$98000$

$2\mathrm{.}2$ A machinery was sold during the year. All disposal entries have been correctly recorded by the accountant. Details of the affected machine at the date of sale are as follows:

Capital profit $76000$

Non$-$capital profit $5000$

Capital gain $60000$

Taxable capital gain $48000$

Recoupment $8000$

$2\mathrm{.}3$ The wear and tear allowance allowed by SARS for the current financial year relating the machinery amounts to R$75000.$ This is correctly calculated after taking into account the sale of the machine.

$3.$ The following prepaid expenses, accrued expenses, income received in advance and accrued income appeared in the statement of financial position of Aladdin Limited at $29$ February $2023.$ These amounts were found to be taken correctly into account in the calculation of the profit before tax of R$638900.($As shown in $2\mathrm{.}1)$

RAND

Prepaid Expenses $$ Water & Electricity R $13000$

Accrued Expenses$$ Telephone R $19000$

Income Received in Advance$$ Rent R $14272$

Accrued Income $$ Interest on fixed deposit R $3000$

$4.$ Dividends paid by the company amounted to R $300000$ for the year. $($Ignore dividend tax$).$

$5.$ Income tax and the inclusion rate for capital gains tax:

$$ The tax rate was $28\%$ for the past two years. There are no temporary or permanent differences other than those which are apparent from the given information.

$$ The inclusion rate for capital gains purposes is $80\%.$

$6.$ The company uses the comprehensive income statement approach to calculate deferred tax.

$1\mathrm{.}1\mathrm{.}1$ Consider additional information $1$ and calculate the under$/$over provision of taxation for the year ended $28$ February $2022.$ State whether it is an under$-$or over$-$ provision for tax for the year ended $28$ February $2022.(2)$

$1\mathrm{.}1\mathrm{.}2$ Prepare general journal entries to record the following transactions on $1$ April $2022$:

$$ The under$/$over provision of income tax.

$$ The additional payment to the tax authorities.

$($Narrations are not required$).(3)$

$1\mathrm{.}2$ Consider additional information $2,3,5$ and $6,$ and calculate the following for

the year ended $29$ February $2023$:

$$ The current tax expense and

$$ The deferred tax$(14)$

$1\mathrm{.}3$ Provide the journal entries to record following for the year ended $29$ February$-2023$:

$$ The provision for taxation for the $2023$ year and

$$ The deferred tax. $(3)$

$1\mathrm{.}4$ Prepare the income tax note $($only the tax rate reconciliation section$)$ that will accompany the Statement of Comprehensive Income for the year ended $29$ February $2023,$ in accordance with International Financial Reporting Standards.

$(8)$

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