In which case(s) were the compensation payments received by the taxpayer treated as capital in nature? Californian Oil Products Ltd (in liq) v FCT (1934) Van den Berghs Ltd v Clark (Inspector of Taxes) (1935) Glenboig Union Fireclay Co Ltd v IRC (1922) Heavy Minerals Pty Ltd v FCT (1966) Allied Mills Industries Pty Ltd v FCT (1989)

A factory owned by CCT Limited was destroyed by fire. CCT Limited lodged an insurance claim for the value of the factory building, plant, and an amount equal to one year’s net profit. During the year there were a number of meetings with the representatives of the insurance company. Finally, before year-end, it was decided that CCT Limited would receive compensation for 90% of its claim. CCT Limited received a letter that the settlement check for that amount had been mailed,but it was not received before year-end. How should CCT Limited treat this in its financial statements?a.Because the settlement of the claim was conveyed by a letter from the insurance company that also stated that the settlement check was in the mail for 90% of the claim, record 100% of the claim as a receivable at year-end as it is virtually certain that the contingent asset will be received, and adjust the 10% next year when the settlement check is actually received.b.Wait until next year when the settlement check is actually received and not recognize or disclose this receivable at all since at year-end it is a contingent asset.c.Because the settlement of the claim was conveyed by a letter from the insurance company that also stated that the settlement check was in the mail for 90% of the claim, record 90% of the claim as a receivable as it is virtually certain that the contingent asset will be received.d.Disclose the contingent asset in the footnotes.

A factory owned by CCT Limited was destroyed by fire. CCT Limited lodged an insurance claim for the value of the factory building, plant, and an amount equal to one year’s net profit. During the year there were a number of meetings with the representatives of the insurance company. Finally, before year-end, it was decided that CCT Limited would receive compensation for 90% of its claim. CCT Limited received a letter that the settlement check for that amount had been mailed,but it was not received before year-end. How should CCT Limited treat this in its financial statements?a.Wait until next year when the settlement check is actually received and not recognize or disclose this receivable at all since at year-end it is a contingent asset.b.Because the settlement of the claim was conveyed by a letter from the insurance company that also stated that the settlement check was in the mail for 90% of the claim, record 90% of the claim as a receivable as it is virtually certain that the contingent asset will be received.c.Disclose the contingent asset in the footnotes.d.Because the settlement of the claim was conveyed by a letter from the insurance company that also stated that the settlement check was in the mail for 90% of the claim, record 100% of the claim as a receivable at year-end as it is virtually certain that the contingent asset will be received, and adjust the 10% next year when the settlement check is actually received.

What is the accounting treatment for a group where the reporting entity is being sued, with a high likelihood of losing the case and being asked to pay out a compensation of 1 million dollars ?a.Upon consolidation, the unrecorded liability will be recognised at its fair value.b.No reporting is necessary until the case is settled.c.Only a footnote in the consolidated financial statements is required.d.None of the above

An individual taxpayer had the following transactions during the current year:Workers’ compensation payments$30,000Damages received for slander40,000Loss on the sale of a personal residence75,000W-2 wages80,000What is the taxpayer’s adjusted gross income?

The following list of balances appeared, amongst others, in the books of Peterson (Pty) Ltd on 31 December 2023: ROrdinary share capital (shares issued at R2 each).........................................750 000Proceeds of 100 000 ordinary shares issued on 31 October 2023..................200 000 The following decisions were made by the directors on 31 December 2023 and must still be recorded in the books of Peterson (Pty) Ltd:Capitalization shares must be issued to the ordinary shareholders registered in the share register on 31 December 2023 in the ratio of one ordinary share at R1,50 for every five ordinary shares held.REQUIRED:The value of shares to be capitalised is?