FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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C Limited is a stock broking firm in the business of buying and selling shares on the JSE (Johannesburg Securities Exchange) on behalf of its clients and on its own behalf. On 1 December 2015, C Limited bought, on its own account, 10 000 shares of D Limited when the market price was R40. The share price of D Limited rose drastically to R60 and on 31 March 2016, C Limited sold 5 000 of the D Limited shares.

Assuming that the year-end of C Limited is 31 March each year and that the corporate tax rate is 28% for 2016 and that only 70% of capital gains are taxable, answer the questions that follow:

What amount should be recorded as gain on fair value adjustment in the statement of profit or loss and other comprehensive income for the year ended 31 March 2016?

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