Answer one question from this section. 1. Visionary Toys (VT) Visionary Toys (VT) produces highly innovative toys for children. VT began operation in January 2017 and its unique selling point/proposition (USP) is producing toy parts with a 3D printer. VT uses the reducing balance method of depreciation. 3D technology changes rapidly and the financial directors are also considering ways of reducing VT's tax liabilities in 2018. The financial director presented financial information for VT at the end of 2017. Table 1: Revenue and expense information for the year 2017 and balance sheet items at 31 December 2017 Cash $1000 Net fixed assets $27 000 Interest paid $250 Creditors $4000 Debtors $3500 Accumulated retained profit end of 2017 $10000 Costs of goods sold $7500 Sales revenue $27 250 Short-term loans $1500 Overdraft balance $2000 $7000 Expenses Share capital Dividends paid Long-term liabilities Stock of toy parts $13500 $2500 $5000 $4500 [Source: © International Baccalaureate Organization 2018] (a) Define the term unique selling point/proposition (USP). (b) (i) Construct a fully labelled balance sheet for VT for the end of 2017. (ii) Calculate the acid test (quick) ratio for VT for 2018. (c) Explain one reason for VT to use the reducing balance method of depreciation.
Answer one question from this section. 1. Visionary Toys (VT) Visionary Toys (VT) produces highly innovative toys for children. VT began operation in January 2017 and its unique selling point/proposition (USP) is producing toy parts with a 3D printer. VT uses the reducing balance method of depreciation. 3D technology changes rapidly and the financial directors are also considering ways of reducing VT's tax liabilities in 2018. The financial director presented financial information for VT at the end of 2017. Table 1: Revenue and expense information for the year 2017 and balance sheet items at 31 December 2017 Cash $1000 Net fixed assets $27 000 Interest paid $250 Creditors $4000 Debtors $3500 Accumulated retained profit end of 2017 $10000 Costs of goods sold $7500 Sales revenue $27 250 Short-term loans $1500 Overdraft balance $2000 $7000 Expenses Share capital Dividends paid Long-term liabilities Stock of toy parts $13500 $2500 $5000 $4500 [Source: © International Baccalaureate Organization 2018] (a) Define the term unique selling point/proposition (USP). (b) (i) Construct a fully labelled balance sheet for VT for the end of 2017. (ii) Calculate the acid test (quick) ratio for VT for 2018. (c) Explain one reason for VT to use the reducing balance method of depreciation.
SWFT Essntl Tax Individ/Bus Entities 2020
23rd Edition
ISBN:9780357391266
Author:Nellen
Publisher:Nellen
Chapter16: Multijurisdictional Taxation
Section: Chapter Questions
Problem 1RP
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