You are the auditor of LUO Ltd, a manufacturing company. For the year ended 30 June 2019, LUO disclosed in its financial statements legal revenue of $16 million. You audited the account and noted that the money related to a court case that LUO recently won despite the fact that the other party has filed an appeal against the court decision. The appeal is scheduled to be heard in October 2019. Required: Select which form of opinion you would consider the most appropriate to use. Give reasons.

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Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.