pinto co june 2008

Open a T account! Put in the brought forward figures from last year (on the debit side, a current tax asset of 50 and on the credit side a deferred tax liability of 30)

Put in the figure from the Income Statement 160 (debit I/S and credit the tax T account)

Put in the carry forward figures from the question (50 deferred tax and 150 current tax) These two appear below the total line in the T account on the credit side so must be brought down from ABOVE the total line on the debit side.

Now balance off the T account. On the debit side there is 50, 50 and 150 = 250

On the credit side there is 160 and 30 = 190

To balance the account, we need 60 more on the credit side and that must represent a cash refund – it cannot represent anything else! we’ve looked at all other elements of tax in the question

OK?

You’re welcome

In case the question is slightly different… I am taking it from the BPP P&R kit from last year for a CBE style question relating to numbers 279 – 283 in the kit. I’ve pasted the question below just fro reference….

Pinto – CBE Style OTQ case
The following scenario relates to questions 279–283.
Pinto is a publicly listed company. The following financial statements of Pinto are available:
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR YEAR ENDED 31 MARCH 20X8
(extract)
$’000
Profit before tax 440
Income tax expense (160)
Profit for the year 280
Other comprehensive income
Gains on property revaluation 100
Total comprehensive income 380

STATEMENTS OF FINANCIAL POSITION (extracts) AS AT
31 March 20X8 31 March 20X7
$’000 $’000 $’000 $’000
Non-current assets (note (i))
Property, plant and equipment 2,880 1,860
Investment property 420 400
3,300 2,260
Equity and liabilities
Equity shares of 20 cents each (note (iii)) 1,000 600
Share premium 600 Nil
Revaluation surplus 150 50
Retained earnings 1,440 2,190 1,310 1,360
3,190 1,960
Non-current liabilities
6% loan notes nil 400
Deferred tax 50 50 30 430
Current liabilities
Trade payables 1,410 1,050
Bank overdraft nil 120
Warranty provision 200 100
Current tax payable 150 1,760 nil 1,270
Total equity and liabilities 5,000 3,660

The following supporting information is available:

(i) An item of plant with a carrying amount of $240,000 was sold at a loss of $90,000 during the year. Depreciation of $280,000 was charged (to cost of sales) for property, plant and equipment in the year ended 31 March 20X8. Pinto uses the fair value model in IAS 40 Investment property. There were no purchases or sales of investment property during the year.

(ii) A dividend of 3 cents per share was paid on 1 January 20X8.

(iii) $60,000 was included in Pinto’s profit before tax for the year ended 31 March 20X8 in respect of income and gains on investment property.

You are preparing a statement of cash flows for Pinto for the year to 31 March 20X8.