Securing Higher Grades Costing Your Pocket? Book Your Assignment at The Lowest Price Now!

Account Practical Approach Pearson Education

tag 0 Download5 Pages 1,049 Words tag Add in library Click this icon and make it bookmark in your library to refer it later. GOT IT

Question:

Discuss About The Accounting A Practical Approach Pearson Education?

 

Answer:

Introducation

As per the Australian taxation provisions, accounting for income tax purpose is for production of the overall result to reflect the activities with trading stock in a year. According to Section 70(10) of the Income Tax Assessment Act 1997, "Trading stock" means anything that is produced or acquired or manufactured, which is held for the purposes of sale or exchange or manufacture in the course of business (Valuing trading Stock, 2017).

According to Section 70(10) of the Income Tax Assessment Act 1997, an item of trading stock in hand at the end of an income year shall be valued at cost or its market selling value or its replacement value (Blakelock and King, 2017).The term 'obsolescence' refers to stock which is going out of use; or going out of date, or becoming unfashionable or outmoded[1].  The accurate value of the obsolete stock will be scrap value if this stock can be sold as scrap (TR 93/23. Income tax: valuation of trading stock subject to obsolescence or other special circumstances, 2006). If it cannot be sold as scrap but remains on hand, it may be valued at nil.

Case analysis and Assessability of trading stock

In the given case, Tony manufactures the gazebo and second-hand gazebo chairs which are his trading stock at the end of the income year; which can be valued either at cost or selling price or replacement cost; also a different method can be chosen each year for different items of stock. The obsolete item shall be either valued at nil or its scrap value, whichever is the case.

Value of trading stock of New Gazebos based on the cost:

Item of Cost

Value (in $)

Labour

70

Material

80

Factory Overheads

100

Total

250

No. of new Gazebos manufactured

10

No. of new Gazebos sold

6

Closing Stock of New Gazebos

4

Value of closing stock of new Gazebos

1000

 

Value of second-hand Gazebo Chairs:

Particulars

No.

Value/piece(in $)

Total Value(in $)

Opening stock

5

5

25

Purchase

3

10

30

Total

8

 

55

Market selling price

 

20

 

Cost of replacing

 

15

 

No. of chairs sold

4

 

78

Closing stock

4

 

 

Since the new gazebos and second-hand gazebo chairs are manufactured and acquired for the purpose of the sale will form part of the trading stock. By considering the above calculation, Value of the 4 new gazebos at 30 June 2017 will be $1000. Since the market selling value differs from the market value of the item, closing value of 4-second hand gazebo chairs can be taken at the replacement cost of $15 for each chair, which totals to $60. The nominal value of $1 to be taken as the value of obsolete units.

Case description and legal provisions associated with it

According to the given case taxpayer sells and services computers. Spare parts purchased as part of this business are used either to replace defective parts in computers sold or to fix computers maintained. Thus issue, in this case, is to determine

  • Whether these spare parts will be considered as trading stock?
  • What if the taxpayer is engaged in the leasing of computers to other individuals and utilise the spare parts for the resolving defects in the leased computers?

Spare parts held in stock by a computer supplier are considered as trading stock if they are used by the supplier in the following ways[2]:

  • Direct sale.
  • Repair of any equipment with a separate charge.
  • Repair of a customer's equipment under an agreement of maintenance with periodical maintenance charge (TR 93/20.Income tax: computer spare parts, 1993).
  • Repair of a customer's equipment under warranty.
  • Repair of new or used computer equipment purchased for the purpose of making further sales[3].
  • Manufacturing the computer equipment for making a further

At times, a computer is sold or leased to a purchaser with either warranty of voluntary, contractual or statutory nature where a warranty service is provided by labour and parts for a certain period at no cost to the customer (Barkoczy, 2017). At the expiry, they enter into a maintenance agreement where computer supplier is required to maintain the customer's equipment in good condition including the replacement and removal of defective parts (Wilson, Freeman and Freeman, 2015). The customer pays an annual maintenance fee in lieu of warranted services in the provision of a repair-on-demand service.

Case analysis and Assessability of trading stock

In the current case, the taxpayer is making sales of computers as well as repairing computers for which a maintenance agreement has been entered. Thus both the categories fall under the criteria where spare parts will be considered as a trading stock.  

Under the lease agreement where the taxpayer would lease computers and repair leased computers with its acquired spare parts, an annual maintenance fee is charged by the supplier.  Unless the service provided is other than the agreement, no further charges are collected from the customer. Therefore these spare parts fall under the statutory list given above.

Spare parts used are used either to replace defective parts in computers sold or to fix computers maintained under maintenance agreements will be considered as the trading stock in this case. If the taxpayer only lease computers to its customers and make use of the spare parts to remedy defects in the leased computers, still these spare parts will form part of the trading stock as the lease agreement is nothing but another type of warranty or maintenance agreement, where the supplier assures the customer of maintaining the equipment in workable condition during the tenure of agreement.

 

References

Barkoczy, S., 2017. Core Tax Legislation and Study Guide. OUP Catalogue.

Blakelock, S. and King, P., 2017. Taxation law: The advance of ATO data matching. Proctor, The, 37(6), p.18.

Wilson, V., Freeman, S. and Freeman, J., 2015. Accounting: A Practical Approach. Pearson Higher Education AU.

TR 93/20.Income tax: computer spare parts. 1993. [Online]. ATO references: NO NO 92/8618-7 ISSN 1039 – 0731. Available through < https://www.ato.gov.au/law/view/document?docid=TXR/TR9320/NAT/ATO/00001>. [Accessed on 2nd October 2017].

TR 93/23. Income tax: valuation of trading stock subject to obsolescence or other special circumstances. 2006. [Online]. ATO references: NO  92/9428-7 ISSN 1039 - 0731 Available through < https://law.ato.gov.au/atolaw/view.htm?docid=TXR/TR9323/NAT/ATO/00001>. [Accessed on 2nd October 2017].

Valuing trading Stock. 2017. [Online]. Available through < https://www.ato.gov.au/business/income-and-deductions-for-business/reconciliation-activities/accounting-for-trading-stock/valuing-trading-stock/>. [Accessed on 2nd October 2017]

OR

Cite This Work

To export a reference to this article please select a referencing stye below:

My Assignment Help. (2019). Account Practical Approach Pearson Education. Retrieved from https://myassignmenthelp.com/free-samples/account-practical-approach-pearson-education.

"Account Practical Approach Pearson Education." My Assignment Help, 2019, https://myassignmenthelp.com/free-samples/account-practical-approach-pearson-education.

My Assignment Help (2019) Account Practical Approach Pearson Education [Online]. Available from: https://myassignmenthelp.com/free-samples/account-practical-approach-pearson-education
[Accessed 10 December 2019].

My Assignment Help. 'Account Practical Approach Pearson Education' (My Assignment Help, 2019) <https://myassignmenthelp.com/free-samples/account-practical-approach-pearson-education> accessed 10 December 2019.

My Assignment Help. Account Practical Approach Pearson Education [Internet]. My Assignment Help. 2019 [cited 10 December 2019]. Available from: https://myassignmenthelp.com/free-samples/account-practical-approach-pearson-education.


For years now, MyAssignmenthelp.com is providing affordable essay help to millions of students worldwide. Our essay assistance services have helped us in assisting students with even the toughest essay assignments. We take pride in the fact that we cater the best assistance to search terms like help me with my essay. We offer affordable services in the fastest way possible. For our fast delivering services, students trust us with their urgent essay assignment needs. Two of our most popular essay writing services are maths essay help and English essay help.

Latest Tax Samples

HA3042-Imposition And Collection Of Income Tax

Download : 0 | Pages : 13

Answer: Introduction:  One of main sources of revenue for a country is the taxes that it collects from its citizens including individual, corporate and other entities. In order to regulate the taxation matters in the country each and every country has respective legislations. In Australia, earlier it was Income Tax Assessment Act, 1936 that used to govern the provisions related to imposition and collection of income tax by the country on t...

Read More arrow

HA3042 Taxation Law 3

Download : 0 | Pages : 13

Answer: Answer 1 The annual payment is not considered as income in Australia since lottery winnings are not taxable and are considered as prizes. Given that the ‘Set for Life' is a lottery, the winnings though distributed over a long period of time, are not susceptible to taxation. This means that the annual prize is not declared on a tax return. Initially, taxation is done at the point of obtaining the scratches where the scratches are...

Read More arrow

LAW505 Taxation 3

Download : 0 | Pages : 12
  • Course Code: LAW505
  • University: Charles Sturt University
  • Country: Australia

Answer: Issue 1 As per the case facts outlined, Amber has enacted certain transactions involving sale of certain assets and other contractual agreements. In this background, it is essential to outline the various tax liabilities that would potentially arise for Amber. The various issues in this regards are indicated below. 1) Owing to liquidation to chocolate shop, proceeds would be obtained and it needs to be outlined if capital gains tax w...

Read More arrow

ACC3TAX-Tax Implications Related To The Sale Of Brent Wilson House

Download : 0 | Pages : 6

Anwer: Answer to question 1:  As stated in the “section 108-5 of the ITAA 1997” capital assets is usually referred as the form of property or any kind of the legal equitable rights which is not treated as the property. As stated under the “section 108-5 of the ITAA 1997” the land and building are not considered for the capital gains tax purpose (Barkoczy 2014). As stated in “section 104-10 (1) of the ITAA 19...

Read More arrow

HA3042 Taxation Law

Download : 0 | Pages : 18

Answers: 1 Prizes and awards are referred by Australian Tax Office as other income mainly because they are not earned on regular basis as is seen in normal business operations. The tax office is likewise seen to explain the classification of awards and prizes for tax purpose on these gaming and winnings events as either tax exempt or taxable (Marshall and Armstrong, 2010. Pg.220.) Australian Tax System and for this case Australian Tax O...

Read More arrow
Next
watch

Save Time & improve Grades

Just share your requirements and get customized solutions on time.

question
We will use e-mail only for:

arrow Communication regarding your orders

arrow To send you invoices, and other billing info

arrow To provide you with information of offers and other benefits

1,160,757

Orders

4.9/5

Overall Rating

5,050

Experts

Our Amazing Features

delivery

On Time Delivery

Our writers make sure that all orders are submitted, prior to the deadline.

work

Plagiarism Free Work

Using reliable plagiarism detection software, Turnitin.com.We only provide customized 100 percent original papers.

time

24 X 7 Live Help

Feel free to contact our assignment writing services any time via phone, email or live chat.

subject

Services For All Subjects

Our writers can provide you professional writing assistance on any subject at any level.

price

Best Price Guarantee

Our best price guarantee ensures that the features we offer cannot be matched by any of the competitors.

Our Experts

Assignment writing guide
student rating student rating student rating student rating student rating 5/5

529 Order Completed

95% Response Time

Ivan Blank

PhD in Functional Human Biology

Wellington, New Zealand

Hire Me
Assignment writing guide
student rating student rating student rating student rating student rating 5/5

2830 Order Completed

97% Response Time

Leroy Bicknell

MBA in Marketing

London, United Kingdom

Hire Me
Assignment writing guide
student rating student rating student rating student rating student rating 5/5

647 Order Completed

98% Response Time

Adlina Han

Masters in Marketing with Specialization in Branding

Singapore, Singapore

Hire Me
Assignment writing guide
student rating student rating student rating student rating student rating 5/5

2279 Order Completed

97% Response Time

Zachary Perez

PhD in Computer Science and Information System

Washington, United States

Hire Me

FREE Tools

plagiarism

Plagiarism Checker

Get all your documents checked for plagiarism or duplicacy with us.

essay

Essay Typer

Get different kinds of essays typed in minutes with clicks.

edit

GPA Calculator

Calculate your semester grades and cumulative GPa with our GPA Calculator.

referencing

Chemical Equation Balancer

Balance any chemical equation in minutes just by entering the formula.

calculator

Word Counter & Page Calculator

Calculate the number of words and number of pages of all your academic documents.

Refer Just 5 Friends to Earn More than $2000

Check your estimated earning as per your ability

1

1

1

Your Approx Earning

Live Review

Our Mission Client Satisfaction

Thank you for the professional writing and the time-efficient. I would recommend to my friend for sure

flag

User Id: 349555 - 10 Dec 2019

Australia

student rating student rating student rating student rating student rating

It was very well written and a good assignment with the amount of time that was allotted.

flag

User Id: 235137 - 10 Dec 2019

Australia

student rating student rating student rating student rating student rating

DO NOT USE THIS COMPANY.... Hopeless, poor grammar and unable to meet brief. A week of arguing and finally redid work which was just as hopeless as first attempt.

flag

User Id: 303057 - 10 Dec 2019

Australia

student rating student rating student rating student rating student rating

The report was well written and helped me get the mark which I would have got If I had the time to do it. thank you for helping me pass the unit.

flag

User Id: 318318 - 10 Dec 2019

Australia

student rating student rating student rating student rating student rating
Have any Query?