The Nairobi County through its water and sewage services provider, the Nairobi Water and Sewerage Company Ltd
Question:
The Nairobi County through its water and sewage services provider, the Nairobi Water and Sewerage Company Ltd incurred the following costs in its attempt to improve the water and sewer services to the Nairobi residents. The company is a registered company with the county government as the majority shareholder and is also registered for VAT.
The construction Cost of buildings for water plant and sewer plant.
Water Plant Building | Sewer Plant Building | |
Architects fees (inclusive of VAT) | 2,400,000 | 7,200,000 |
Labour and related charges | 12,400,000 | 24,000,000 |
Compensation paid out for Land | 42,000,000 | 5,600,000 |
Materials for construction(inclusive of Vat) | 16,000,000 | 24,000,000 |
Cost of Generator | 30,000,000 | |
Paintworks(inclusive of VAT) | 3,600,000 | 5,800,000 |
County Fees(approvals) | 3,500,000 | 1,600,000 |
79,900,000 | 98,200,000 |
NOTES
The following transactions occurred during the year: The costs/expenses are exclusive of VAT.
1. Purchased Two 3 ton tipper for waste disposal Kshs 10,000,000
2. Purchased used machinery and equipment for water supply Kshs 42,000,000 (Only machinery valued at kshs 36,000,000 have been put to use in the year 2021. The rest are slated to be commissioned on 1st January 2022)
3. Installation and commissioning of water &sewer pipes Kshs 9,600,000
4. Imported sewer machinery and related equipment from Iran Kshs 32,000,000 (Of these equipment worth 5,400,000 are not affixed to theplant-moveable)
5. Purchased a 28 seater staff bus Kshs 3,600,000
6. Bought Television set and laptops Kshs 100,000
7. Purchased Furniture and fittings Ksh 1, 800,000
8. Purchases a Toyota Lexus, for off road used Kshs 2,400,000
9. Purchased a Mercedes Benz for Official use Kshs 4,200,000
10. Repairs and maintenance cost of disposal vans Kshs 1,200,000
11. Staff expenses, salaries and medical expenses for the year 2016 Kshs 5,400,000
12. The 28 seater bus was involved in an accident. The insurance company paid Kshs 3,200,000.
13. The Mercedes Benz was sold for Kshs 4,400,000 the same year.
14. The government through the ministry of devolution supplied the company with sewer equipment worth Kshs 72,000,000. This was a government-county government direct funding financed by the European UnionFund for Africa Development.
15. The company declared a profit before tax of Kshs 303,800,000. This is after depreciation of kshs 35,400,000 and includes gain on sale of assets of Kshs 2,200,000.
Required:
i) Compute capital allowances available to Nairobi Water Company Ltd for the year 2022. Show all your workings. (12 marks)
ii) Calculate the revised the adjusted total taxable income for the company (3 marks)
Management Accounting
ISBN: 9780730369387
4th Edition
Authors: Leslie G. Eldenburg, Albie Brooks, Judy Oliver, Gillian Vesty, Rodney Dormer, Vijaya Murthy, Nick Pawsey