(c) Software Supply Co. (4 marks)

(b) Assuming that the income from the sale of the books is not treated as trading income, calculate Bob’s taxable

income and gains for all relevant tax years, using any loss reliefs in the most tax-efficient manner. Your

answer should include an explanation of the loss reliefs available and your reasons for using (or not using)

them. (12 marks)

Assume that the rates and allowances for 2004/05 apply throughout this part of the question.

(ii) Service quality; and (7 marks)

(b) (i) Discusses the principles involved in accounting for claims made under the above warranty provision.

(6 marks)

(ii) Shows the accounting treatment for the above warranty provision under IAS37 ‘Provisions, Contingent

Liabilities and Contingent Assets’ for the year ended 31 October 2007. (3 marks)

Appropriateness of the format and presentation of the report and communication of advice. (2 marks)

(c) Prepare briefing notes, to be used by an audit partner in your firm, assessing the professional, ethical and

other issues to be considered in deciding whether to proceed with the appointment as auditor of Medix Co.

Note: requirement (c) includes 2 professional marks. (12 marks)

(ii) The shares held in Date Inc and the dividend income received from that company. (7 marks)

(c) (i) Compute Gloria’s capital gains tax liability for 2006/07 ignoring any claims or elections available to

reduce the liability. (3 marks)

(ii) the directors agree to disclose the note. (4 marks)

(ii) Explain the organisational factors that determine the need for internal audit in public listed companies.

(5 marks)

(ii) Discuss whether gains and losses that have been reported initially in one section of the performance

statement should be ‘recycled’ in a later period in another section and whether only ‘realised’ gains and

losses should be included in such a statement. (9 marks)

(ii) Explain why the disclosure of voluntary information in annual reports can enhance the company’s

accountability to equity investors. (4 marks)