Devine purchased an annuity of N$1 500 per month from an insurer on 31 May 2019. The cash consideration paid by Devine was N$420 000 and the total expected returns of all the annuities as per the contract amounts to N$560 000. She received the first monthly cheque of

Devine purchased an annuity of N$1 500 per month from an insurer on 31 May 2019. The cash consideration paid by Devine was N$420 000 and the total expected returns of all the annuities as per the contract amounts to N$560 000. She received the first monthly cheque of

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Devine purchased an annuity of N$1 500 per
month from an insurer on 31 May 2019. The cash
consideration paid by Devine was N$420 000
and the total expected returns of all the
annuities as per the contract amounts to N$560
000. She received the first monthly cheque of
N$1 500 on 30 June 2019.
Required: Calculate the exempted capital
element of the annuity received by Devine for
the 2020 year of assessment.
Answer:

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