Journal Of The Research Society Operational-Myassignmenthelp.Com

Question: Discuss About The Journal Of The Research Society Operational? Answer: Introducation According to the taxation provisions of australia, accounting for the purpose of taxation is for the generation of entire consequences resultant to show the activiting within the trading stock (Blakelock and King, 2017). As per the Section 70(10) of the Income Tax Assessment Act 1997, trading stock refers to whichever thing that is been generated or obtained or produced, which is provided for the sale or production or trade purpose in business course. In accordance with the Section 70(10) of the Income Tax Assessment Act 1997, an item or asset of trading stock held in hand at the income year end shall be valued at its actual or market value cost or at the replacement value. Obsolescence means those stocks which are outdated or are of no longer use. The word has been appropriately explained in ITAA 97 in following manner stock which has become outmoded or which has gone out of use. The exact value of this obsolescence will considered as scrap value, in case he stock is put into sale as a scrap. (TR 93/23.Income tax: Trading stock valuation subject to discarded, unused or another uncertain, 2006). The value of obsoletestockshall be valued at zero, if the item cannot be sold (TR 93/23.Income tax: valuation of trading stock subject to obsolescence or other special circumstances,2006). Case analysis and accessibility of trading stock In this present case, Tony produces the gazebo and 2nd hand or used gazebo chair which are considered as his trading stock at income years end, that can be valued at cost or the price of selling or substitution cost, various method can be adopted for various stock items as well. The value of obsoletestockshall be valued at zero or on its value of scrap (Valuing trading Stock, 2017.). Working note Value of trading stock of New Gazebos based on the cost: Item of Cost Value (in $) Labour 70 Material 80 Factory Overheads 100 Total 250 No. of new Gazebos manufactured 10 No. of new Gazebos sold 6 Closing Stock of New Gazebos 4 Value of closing stock of new Gazebos 1000 Value of second-hand Gazebo Chairs: Particulars No. Value/piece(in $) Total Value(in $) Opening stock 5 5 25 Purchase 3 10 30 Total 8 55 Market selling price 20 Cost of replacing 15 No. of chairs sold 4 78 Closing stock 4 As per views of Wilson, Freeman and Freeman (2015) since the acquisition and production of gazebo and chairs are done for sale purpose will further treated as part of cost of trading stock. By taking above computation into account, four new gazebo will be valued at $1000 on 30June 2017. As the value of market selling variates from the existing marketing value of the item, closing price of four used gazebo chairs will be valued at $15, which is replacement cost per chair, which means 4 multiplied by $15 that is $60. Further the nominal value which is $1 can be taken as the obsolete units value. Case description and legal provisions associated with it In accordance with the case, taxpayer is engaged in selling and rendering services of computers. Business purchase of spare parts is utilized to change faulty parts of compute. Hence, the issue to be determined in this case is as follows: If or if not these spare parts will be stated as trading stock? Supposing that the taxpayer is involved in hiring of computer to any individual and using those parts for repairing the faults in the hired computers? Spare parts in hand by the dealer of computer are stated as trading stock, if the supplier makes use of the trading stock in such a way: Direct selling Separate charge is made for any equipment repair or service If an equipment of customer is repaired as per the maintenance agreement with maintain expenses incurred on a continue basis after reasonable interval (Saad, 2014). An equipment of customer is repaired if it is in its warranty period repairing of new and second hand computer tools purchased for the sale purpose (Seluk and A?ral?, 2013) Producing computer equipment for supplementary sale. A computer put into sale or is leased to a buyer along with a guarantee; the same could be of any nature either voluntary, legal or contractual nature, in which these guarantee service are given by labor and parts are provided for specified period at free of cost. At the date of expiry or after the period for which warranty is provided ends, item enter in a agreement of maintenance in which the supplier is entitled to maintain the item in a well condition inclusive of elimination or replacement of faulty parts. Since, the customer has to make payment of yearly maintenance fee in exchange of guaranteed under the provision relating to maintenance on demand. Case analysis and Assess ability of trading stock In the given case, taxpayer sells computer and repairs them too on the basis of maintenance agreement. Thus, both aspects are under the criteria, in which spare parts will be states as trading stock. As per the leasing agreement, in which taxpayer shall lease computer and can repair them too with its held spare parts, and a yearly maintenance fees has to paid to the supplier. If the services are not rendered or are provided which are inclusive in the agreement, no extra charges will be taken from customer. Hence, spare parts specified above are part of provided statutory list. Spare parts are used in order to replace faulty parts in the sold computers or to repair them under the agreement of maintenance will be stated as trading stick in given case (TR 96/D20. Income tax: whether materials, spare parts and packaging items held by a taxpayer supplying services are trading stock, 2017). In case the taxpayer, leases computers to their customer and use those parts to cure faults in those computers, still those spare parts will be considered as trading stock As the lease agreement is nothing but another type of warranty or maintenance management, where the supplier assures the customer of maintaining the equipment in workable condition during the tenure of agreement (Barkoczy, 2017). This means that taxpayer leases the computer to its clients and applies spare parts in its use for the purpose of repairing the defects or any other issue which exist in leased computer (TR 93/20.Income tax: computer spare parts, 1993). Thus, even in this situation spare part will be treated as part of trade stock and there will be no change in answer. The reason behind the same is lease agreement is treated in same manner as warranty or maintenance agreement. References Barkoczy, S., 2017. Core Tax Legislation and Study Guide. OUP Catalogue. Blakelock, S. and King, P., 2017. Taxation law: The advance of ATO data matching. Proctor, The, 37(6), p.18. Wilson, V., Freeman, S. and Freeman, J., 2015. Accounting: A Practical Approach. Pearson Higher Education AU. Seluk, B. and A?ral?, S., 2013. Joint spare parts inventory and reliability decisions under a service constraint. Journal of the Operational Research Society, 64(3), pp.446-458. Saad, N., 2014. Tax knowledge, tax complexity and tax compliance: Taxpayers view.Procedia-Social and Behavioral Sciences,109. Pp.1069-1075. TR 93/20.Income tax: computer spare parts. 1993.[Online]. ATO references: NO NO 92/8618-7 ISSN 1039 0731. Available through https://www.ato.gov.au/law/view/document?docid=TXR/TR9320/NAT/ATO/00001. [Accessed on 2nd October 2017]. TR 93/23.Income tax: valuation of trading stock subject to obsolescence or other special circumstances.2006. [Online]. ATO references:NO 92/9428-7 ISSN 1039 - 0731Available through https://law.ato.gov.au/atolaw/view.htm?docid=TXR/TR9323/NAT/ATO/00001. [Accessed on 2nd October 2017]. Valuing trading Stock. 2017. [Online]. Available through https://www.ato.gov.au/business/income-and-deductions-for-business/reconciliation-activities/accounting-for-trading-stock/valuing-trading-stock/. [Accessed on 2nd October 2017]. TR 96/D20. Income tax: whether materials, spare parts and packaging items held by a taxpayer supplying services are trading taxation-law. 2017. [Online]. Available through https://law.ato.gov.au/atolaw/view.htm?docid=DTR/TR96D20/NAT/ATO//. [Accessed on 9th October 2017]. TR 93/23. Income tax: valuation of trading stock subject to obsolescence or other special circumstances. 2017. [Online]. Available through https://law.ato.gov.au/atolaw/view.htm?docid=TXR/TR9323/NAT/ATO//. [Accessed on 9th October 2017].