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Hello Mike ,thank you for answering the regarding xtol (6/14) amended.i know you have been answering it many times though you answered me I really appreciate it and I’m thankful to you .Mike ,one last question I didn’t get the logic behind the present value I mean we are still in the year 20X3and why did we take the pv of end of the 3rd year ?
Hello Mike,could you please explain about the figure to be shown in the statement of profit and loss as in the income tax
Like I didn’t get the logic behind adding 3200 and 3700 in there please Mike help me out with thisWe calculated the present value of all the cash flows that would be necessary to service the loan
The present value is the TODAY value of tomorrow’s payments
When we have calculated that today value and deducted that from the face value of this convertible loan, we arrive at the equity element
Have you tried question 15 on page 213 of the free course notes on this site? As well as all the other 15 questions in that section of the course notes?
All 16 questions are extracts from past examinations all, without exception, this topic is worth AT LEAST 3 marks and often 4 marks in a question such as Xtol
Let me get you started … open2 T accounts, one for deferred tax and one fpr current tax
Put in the figures from the trila balance making sure that you enter those figures on the correct side of the two T accounts
Put in the 2 provisions (one in each T account)
Balance off deferred tax and transfer the balance to the current tax account
Balance off the current tax account and take the balancing figure to the statement of profit or loss as the tax charge for the year
Now do the other 15 exercises and get yourself into a position where you can GUARANTEE 3 (possibly 4) marks in an exam and achieve those marks in less than 60 seconds
Do NOT enter that exam room without being confident about scoring these easy tax marks!
OK?
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