Page 17 - CIMA OCS Workbook May 2019 - Day 1 Tasks

Chapter 10

FINANCIAL REPORTING AND

TAXATION (F1)

PRACTICE TASKS

EXERCISE 1 (TAX)

UPDATE

At the last directors’ board meeting, there was discussion regarding the income tax paid by
VitaMine. Juliette Goh (Finance Director) is the only professionally qualified accountant on the
board of directors and she was not able to attend the last directors’ board meeting due to illness.
Juliette is still absent from work due to illness.

TRIGGER

This morning you received the following email from Suresh Patel (Managing Director):

From: Suresh Patel, Managing Director.
To: Finance Officer
Subject: Income tax paid by VitaMine

Hi.

Following the recent board meeting, I’d like you to look into some issues associated with the
income tax paid by VitaMine. As you are aware, Juliette Goh is away ill and missed the last
directors’ board meeting. Melanie Tan (Sales and Marketing Director) had some queries that
neither Victor Zhang (Production Director) nor I were able to answer.

Melanie did some research and confirmed that the rate of corporation tax that applies to
VitaMine was 20% for both years. However, when she reviewed the last set of annual financial
statements, she noted that the income tax charge in the statement of profit or loss for 2017 was
20.9% of the profit before tax figure, whereas for 2018 the income tax charge represented 19.4%
of profit before tax for the year.
Does that mean VitaMine paid too much tax based upon the 2017 financial statements, and then
paid too little in relation to 2018?

KAPLAN PUBLISHING 35