F7 Revision Mock Exam – Promulgate case/scenario objective test questions

Hi Mike

Please can you answer the two questions below with workings please. I have used the T account approach for the first question but am still not getting the right answer.

Thank you in advance.

Question one:

In Promulgate trial balance as at 31 December 2015 there is a liability in respect of deferred tax of $38.4 million and a current liability in respect of current tax of $5.4 million.

During the year Promulgate taxable temporary differences increased by $20 million of which $12 million related to the revaluation of Promulgate property. The deferred tax relating to this revaluation should be charged to the statement of profit and loss. The company income tax rate for Promulgate is 20%

No provision has yet been made for the income tax liability on this year’s profits not including the revaluation mentioned above. The directors have estimated the liability to be in the region of $22.8 million.

What will be the tax charge in the statement of profit and loss for Promulgate for the year ended 31 December 2015?

Question 2:

Promulgate’s trial balance as at 31 December 2015 showed credit amounts of £500,000,000 and $80,000,000 against the $1 equity shares and the share premium account respectively. On 1 September, 2015 Promulgate had correctly accounted for a fully subscribed 1 for 4 rights issue at an exercise price of $1.20 each.

Promulgate had paid two dividends in the year. The first dividend payment of 4 cents per share was in March and the second dividend payment of 2.5 cents per share was paid in November.

What was the total dividend payment made by Promulgate during the year ended 21 December 2015?