Your Co . was established in 2 0 1 0 as a listed corporation in Kuwait. Below
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Question:
Your Co was established in as a listed corporation in Kuwait. Below is the yearend financial position as of
Financial Position at
Kuwaitis Dinars
Liabilities & Equity Assets
Capital Buildings
Reserves: Accumulated Deprecation
Statutory Machinery
Voluntary Accumulated Depreciation
Pension Provision Furniture
Retained Earnings Accumulated Depreciation
Foreign Investment
Receivables
Inventory
Total Total
Net income for the period is Kd million. The inspections have revealed the following KD:
The company has received government subsidies totaling against custom duties for commodities that are taxexempt. The company has not included this amount in income as it is out of its commercial operation.
equipment was bought on March costing and the whole amount was incurred on the period expenses, despite that annual depreciation is allowed by the tax resolutions.
The year revenues included the following reverted reserves:
a Against securities devaluation
b Against tax liability
c Against Zakat liability
d Pensions and remuneration
e For doubtful accounts of reported receivables.
Tax liability for the year was the company paid on January The record shows that the remaining amount is to be added to taxable income.
Inventory turnover for the year was as such.
a Beginning balance units @ Kd
b First quarter purchases units @ Kd While sales units.
c Second quarter purchases units @ Kd While sales units.
d Third quarter purchases units @ Kd While sales were units.
e Fourth quarter purchases units @ Kd While sales units.
The company used FIFO until May th when management decided to change to LIFO. The market value of ending inventory is estimated to be Kd
The company has a loan to a local bank of Kd with a flat interest rate of for years. The company amortized the loan and the related cost of capital in full on the th of Nov.
Treasury shares that were sold in the open market on June nd for fils per share. These shares were carried over since July th at a par value of fils which includes a premium of fils. Reported income from this sale was fils.
As per the company policies, transfer prices have embedded a profit margin among internal units of the company. The total volume of such transactions exceeded m during the year.
Contingent liability provisions for court disputes are estimated to be proportionated to of reported income, yet to be aggregated within extraordinary items. Usually, tax authorities allow for such provision upon materiality and occurrence comparable to the cash basis.
An amount of KD has been retrieved from contracted projects dated May The amount was disclosed in as held for settlement.
Dues of foreign suppliers based on FOB shipping have over and above handling commissions of one basis point of shipments. The company used to add it up as freightin expenses. On numerous incidences, the tax inspector declined this item from operating expenses resulting in further disputes, until resolved as only half of the total is allowed. The company's shipments are estimated to be KD for
Booked gains from diluted ownership securities in a catalyst subsidiary have not been reported yet, even though the audited financial contained a sum of Kd gains from the same.
Paidin capital has been issued with a premium on the outstanding sum of Kd m The capital has been received with the premium in full by March The tax declaration did not reflect this transaction as recommended by the auditor to be shifted to next financial year for solvency matters.
Required:
Prepare the tax declaration of the company for the year ending If the tax rate is based on a flat rate of on taxable income exceeding kd what is the tax liability of the year?
Assume a progressive tax rate is enforced by an incremental on every Kd a startup percentage of
If the company has the freelance to choose to be imposed according to a regressive tax rate of and then reduced by for every Kd following the first half million, would it be worth considering?
What is the tax rate if the starting rate is increased by bracketing of Kd
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
Posted Date: