subject :Taxation 2
NOTE the question should read interest payable at 31
December 2019 was $350,000 and the end of the current year
$280,000
- Subject Taxation 2 Note The Question Should Read Interest Payable At 31 December 2019 Was 350 000 And The End Of The 1 (58.58 KiB) Viewed 29 times
Wor Ltd, an unregulated company has the following profit and loss account. For year-end 31 December 2020, Wor Ltd made a profit before tax of $8.5 million after charging (crediting) the following: 40 marks Depreciation Interest expense Legal fees Audit fees Interest income Foreign Travel Bad debts Donations $ 240,000.00 1,200,000.00 900,000.00 600,000.00 150,000.00 350,000.00 630,000.00 200,000.00 Additional information: i. Legal fees are as follows: Expenses related to the cost of acquiring fixed assets - $400,000 Expenses in respect of the recovery of debts - $500,000 ii. Bad debts are advances totalling $150,000 to a salesman who had left Wor Ltd.; Mary's Enterprise, a debtor $85,000 and $395,000 being a percentage of sales deemed to be bad. iii. Included in revenue is rank income (net) of $5,000. iv. Interest payable at 31 December 2020 was $350,000 and at the end of the current year $280,000. V. Gross interest of $400,000 receivable at 31 December 2019 was received in 2020 and at the end of the current year
vii. | Profit on the disposal of fixed assets during the year was $75,000 and included in income. viii. Capital allowances are as follows: Initial Allowance Annual Allowance Balancing charge $ 90,000 470,000 60,000 ix. Wer Ltd paid estimated tax of $900,000 for the year 2020. X. Tax deducted at source from interest income during the year was $280,000 xi. Included in foreign travel is $200,000 for the managing director's family. Required: Compute Wor's tax liability for year of assessment 2020 with notes where possible