Question

7. The following information relates to Buss Ltd for the year ended 30 June 2016.
• Accounting profit before income tax (after all expenses $300,000
have been included)
• Fines and penalties (not tax deductible) $20,000
• Depreciation of plant (accounting) $40,000
• Depreciation of plant (tax) $100,000
• Long-service leave expense (not a tax deduction until $8,000
the leave is paid)
• Income tax rate 30%
On the basis of this information the current tax liability is:
a. $74,400
b. $78,000
c. $80,400
d. $99,600

8. Which of the following is NOT a feature of intangibles that differentiates them from other assets?
a. They are largely knowledge based assets.
b. Many are not separable items.
c. They often do not have well-defined property rights.
d. None of the above, i.e. they are all features of intangible assets.
9. One of the advantages of principles-based standard is:
a. They allow for no professional judgement.
b. They are generally simpler.
c. They do not improve representational faithfulness of financial statements.
d. They allow for no manipulation.
10. The bonus issue of shares has the following impact on the equity of a company:
a. total equity increases.
b. total equity decreases.
c. one equity account increases and another equity account decreases by an equal amount.
d. only the amount of issued share capital changes.

Answer 1

Solution:-

7. On the basis of this information the current tax liability is:-

c. $80,400

8. Which of the following is NOT a feature of intangibles that differentiates them from other assets:-

d. None of the above, i.e. they are all features of intangible assets.

9. One of the advantages of principles-based standard is:-

b. They are generally simpler.

10. The bonus issue of shares has the following impact on the equity of a company:-

c. one equity account increases and another equity account decreases by an equal amount.