Answered: which he has determined to be $1,300…

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 2(7 marks) Sam is an employee at a large land development company. He has negotiated car benefits with his employer. Sam was provided with the car for the period 1 April 2020 to 31 March 2021. The leased car value was $22,000 on 1 April 2020, and the car had only been leased for a year at that time. Sam is required to pay for any petrol and other maintenance costs, which he has determined to be $1,300 for the period 1 April 2020 to 31 March 2021. Advise Sam’s employer as to the FBT consequences (using statutory formula method) arising out of the use of the car. You may assume that any benefits are Type 1 fringe benefits.

Definition Definition Benefits in addition to compensation that companies give to their employees. Fringe benefits can boost morale and productivity and keep employees motivated. Companies often use fringe benefits as a competitive advantage to recruit and retain employees. Examples of fringe benefits include pensions, vacation time, tuition reimbursement, free or subsidized meals, and gym memberships.

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